Taxes

Estimating the First Instance of Substantive-Covered Earnings in the Labor Market

Federal Income Taxes, Social Security Taxes, and the U.S. Distribution of Income, 1972

This paper reports on estimates of federal income tax and Social Security tax liabilities of family units in 1972 and summarizes the methods used to make the estimates. Distributions of income both before and after subtracting those liabilities are shown. Several microdata files were combined using both "exact" and "statistical" matching of individual observations in the process of making these estimates.

Social Security Administration's Master Earnings File: Background Information

The Social Security Administration (SSA) receives reports of earnings for the U.S. working population each year from employers and the Internal Revenue Service. The earnings information received is stored at SSA as the Master Earnings File (MEF) and is used to administer Social Security programs and to conduct research on the populations served by those programs. This article documents the history, content, limitations, complexities, and uses of the MEF (and data files derived from the MEF). It is intended for researchers who use earnings data to study work patterns and their implications, and for those interested in understanding the data used to administer the current-law programs.

Distributional Effects of Raising the Social Security Taxable Maximum

As of 2009, Social Security's Old-Age, Survivors, and Disability Insurance program limits the amount of annual earnings subject to taxation at $106,800, and this value generally increases annually based on changes in the national average wage index. This brief uses Modeling Income in the Near Term (MINT) projections to compare the distributional effects of four options for raising the maximum taxable earnings amount beyond its scheduled levels. Two of the options would raise this value so that it covers 90 percent of all covered earnings and two would remove the maximum completely. Within each set of options, the proposals are differentiated by whether the new taxable amounts are used in computing benefits. Most workers would not be affected by these proposals, but some higher earners would experience a substantial increase in taxes. Correspondingly, benefit increases are largely isolated to higher earners, although the return in benefits for taxes paid would also decline. Because the proposals are targeted toward high earners, Social Security's progressivity would increase.

A Progressivity Index for Social Security

Using the Social Security Administration's MINT (Modeling Income in the Near Term) model, this paper analyzes the progressivity of the Old-Age, Survivors and Disability Insurance (OASDI) program for current and future retirees. It uses a progressivity index that provides a summary measure of the distribution of taxes and benefits on a lifetime basis. Results indicate that OASDI lies roughly halfway between a flat replacement rate and a flat dollar benefit for current retirees. Projections suggest that progressivity will remain relatively similar for future retirees. In addition, the paper estimates the effects of several policy changes on progressivity for future retirees.

Estimating the First Instance of Substantive-Covered Earnings in the Labor Market

Financing Social Security 1939-1949: A Reexamination of the Financing Policies of this Period

Presented is an examination of the financing history of the U.S. Social Security system from the passage of the original law in 1935 up through the enactment of the 1950 Amendments to the Social Security Act. In particular, it focuses on the 1939 Social Security Amendments and the subsequent tax rate freezes enacted between 1939 and 1949. It examines the origins of these taxing policies and assesses the impact of the rate freezes on the long-range actuarial balance of the Social Security program during this period.

Comparing Replacement Rates Under Private and Federal Retirement Systems

This article presents a comparison of replacement rates for employees of medium and large private establishments to replacement rates for federal employees under the Civil Service Retirement System and the Federal Employees Retirement System. This analysis shows the possibility of replacement rates exceeding 100 percent for FERS employees who contribute 6 percent of earnings to the Thrift Savings Plan over a full working career. Private-sector replacement rates were quite similar for workers with both a defined benefit and a defined contribution pension plan.

Evidence on the Effects of Payroll Tax Changes on Wage Growth and Price Inflation: A Review and Reconciliation

The Social Security payroll tax rate is scheduled to increase by almost 1 percent for both employees and employers between now and 1990. One of the major elements of the recently adopted Social Security package was an acceleration of the timing of this increase. A number of economists have recommended that as an anti-inflationary policy scheduled increases be avoided or even that the current rates be rolled back.

The Macroeconomic Effects of a Payroll Tax Rollback

In late 1977, the U.S. Congress passed Social Security legislation that included a series of increases in the payroll tax. These increases, which began in 1979 and carry on into the 1980s, substantially raise the projected levels of the Social Security trust funds. Since the amendments were passed, there has been some discussion and several proposals to roll back part of the tax. It is highly likely that additional rollback proposals will be made in the near future. The purpose of this paper is to shed some light on some of the macroeconomic effects of a payroll tax rollback.

Labor Supply, the Payroll Tax, and Internal Rates of Return to Social Security

There is empirical evidence that in the recent past the Old-Age Insurance portion of the Social Security program has acted as a net wage subsidy. In addition, the program had significant intragenerational redistributive effects. Our purpose is to demonstrate how these findings alter conventional views of the labor supply effects of Social Security. Our method is the analysis of a labor supply model that is extended to include empirically significant operational components of the program. We show that the analyses of others are special cases of our more general approach.

Federal Income Taxes, Social Security Taxes, and the U.S. Distribution of Income, 1972

This paper reports on estimates of federal income tax and Social Security tax liabilities of family units in 1972 and summarizes the methods used to make the estimates. Distributions of income both before and after subtracting those liabilities are shown. Several microdata files were combined using both "exact" and "statistical" matching of individual observations in the process of making these estimates.

Value-Added Tax as a Source of Social Security Financing

The data for this study are drawn mainly from the Consumer Expenditure Survey conducted by the Bureau of Labor Statistics during 1972–73. The respondents are divided into five income classes and two age groups. The focus of this analysis is placed on the consumption-type value-added tax.