scholarly journals Estimating Adjustment Frictions Using Nonlinear Budget Sets: Method and Evidence from the Earnings Test

2020 ◽  
Vol 12 (1) ◽  
pp. 1-31 ◽  
Author(s):  
Alexander M. Gelber ◽  
Damon Jones ◽  
Daniel W. Sacks
Keyword(s):  
Adjustment Cost ◽  
Marginal Tax Rate ◽  
Tax Rate ◽  
The Social ◽  
Before And After ◽  
Short Run ◽  
Earnings Test ◽  
Social Security Earnings Test ◽  
The Cost ◽  
Induced Changes

We introduce a method for estimating the cost of adjusting earnings, as well as the earnings elasticity with respect to the net-of-tax share. Our method uses information on bunching in the earnings distribution at convex budget set kinks before and after policy-induced changes in the magnitude of the kinks: the larger is the adjustment cost, the smaller is the absolute change in bunching from before to after the policy change. In the context of the Social Security Earnings Test, our results demonstrate that the short-run impact of changes in the effective marginal tax rate can be substantially attenuated. (JEL H24, H31, H55, J22, J31)

scholarly journals Life-Cycle Welfare Costs of Social Security

1981 ◽  
Vol 9 (2) ◽  
pp. 123-142 ◽  
Author(s):  
Richard V. Burkhauser ◽  
John A. Turner
Keyword(s):  
Social Security ◽  
Income Tax ◽  
Personal Income ◽  
Personal Income Tax ◽  
Present Value Model ◽  
Potential Gain ◽  
The Social ◽  
Earnings Test ◽  
Social Security Earnings Test ◽  
Value Model

One-period models predict that a substantial welfare gain would result from removing the social security earnings test. In this article, we show that such models overestimate the size of potential gains. If one uses instead a two-period model, which captures intertemporal effects, the net result of removing the earnings test is ambiguous. In the presence of a personal income tax, workers who reduce their labor supply in the first period create a welfare loss which must also be considered. We use a present value model to estimate the change in lifetime welfare. We find that the net potential gain from removing the earnings test is probably small, especially when compared to the alternative of an increased personal income tax.

scholarly journals The Employment Effects of the Social Security Earnings Test

2020 ◽  
Author(s):  
Alexander M. Gelber ◽  
Damon Jones ◽  
Daniel W. Sacks ◽  
Jae Song
Keyword(s):  
Social Security ◽  
Employment Effects ◽  
The Social ◽  
Earnings Test ◽  
Social Security Earnings Test

scholarly journals The Employment Effects of the Social Security Earnings Test

2020 ◽  
Author(s):  
Alexander Gelber ◽  
Damon Jones ◽  
Daniel Sacks ◽  
Jae Song
Keyword(s):  
Social Security ◽  
Employment Effects ◽  
The Social ◽  
Earnings Test ◽  
Social Security Earnings Test

scholarly journals THE COST OF DIRECT TAXATION ON INVESTMENT IN BRAZIL

2017 ◽  
Vol 21 (1) ◽  
Author(s):  
Nelson Leitão Paes
Keyword(s):  
Tax Rates ◽  
Marginal Tax Rate ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Direct Taxation ◽  
Economic Profit ◽  
The Rich ◽  
The Cost ◽  
Rich Countries ◽  
The Impact

ABSTRACT This paper analyzed the impact of taxation on the investment in Brazil, focusing on the taxation of corporate income. Following the literature, it was used an economic model to calculate two indicators of effective tax rates - Effective Marginal Tax Rate (EMTR) and Effective Average Tax Rate (EATR). The EMTR measures the increase of the cost of capital due to corporate income tax. The EATR represents a measure of the average tax rate levied on an investment that has a pre-defined economic profit. The results suggest Brazil may face some difficulties to attract foreign investment. The country presents high rates for EATR and EMTR, higher than the average of the rich countries and well above the figures of development countries like Chile, Mexico, South Africa, Russia and China, potential competitors in attracting investments.

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