%0 Report %D 2012 %T Do Income Taxes Affect the Progressivity of Social Security? %A Norma B Coe %A Karamcheva, Zhenya %A Richard W Kopcke %A Alicia H. Munnell %K Income taxes %K Social Security %X Policymakers have designed Social Security to be a progressive retirement program that replaces a larger share of monthly earnings for low- and middleincome workers than for high earners. However, previous research has found that, although the Disability Insurance (DI) component of Social Security is very progressive, the Old-Age and Survivors Insurance (OASI) component may be less progressive than intended. One reason is that high earners tend to live longer than low earners. Since Social Security pays an annuity that lasts throughout retirement, it benefits high earners with greater longevity. Social Security’s progressivity may also be %B Center for Retirement Research at Boston College Briefs %I Center for Retirement Research at Boston College %C Boston, MA %G eng %U https://crr.bc.edu/briefs/do-income-taxes-affect-the-progressivity-of-social-security/ %0 Report %D 2011 %T How Does the Personal Income Tax Affect the Progressivity of OASI Benefits? %A Norma B Coe %A Karamcheva, Zhenya %A Richard W Kopcke %A Alicia H. Munnell %K Methodology %K Public Policy %K Social Security %X This study calculates the impact of federal income taxes on the progressiveness of the Old Age and Survivors Insurance (OASI) program. It uses the Health and Retirement Study (HRS) data linked with the Social Security Earnings Records to estimate OASI contributions and benefits for individuals and households, before and after income taxes, for three birth cohorts. It uses two measures of progressivity: redistribution by decile (the difference between the share of total benefits received and the share of total taxes paid) and effective progression (the change in the Gini coefficient). Under both measures, the results without the income tax confirm previous findings: Social Security is progressive on an individual basis, but that progressivity is dramatically cut when one calculates it on a household basis. Adding income taxes could make the program either more or less progressive. On the one hand, the tax treatment of contributions makes the system even less progressive than generally reported. On the other hand, the taxation of benefits makes it more progressive. The net result is that adding the personal income tax to the analysis makes Social Security more progressive than without taxes, on both the individual and household bases. Importantly, however, the impact of taxation on redistribution increases significantly among younger cohorts. Under current law, the Social Security system becomes more progressive over time. %B Center for Retirement Research at Boston College Working Papers %I Center for Retirement Research at Boston College %C Boston, MA %G eng %U https://crr.bc.edu/working-papers/how-does-the-personal-income-tax-affect-the-progressivity-of-oasi-benefits/ %4 Public policy/social security/Gini coefficient/taxation/income tax %$ 69554