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Current taxation of qualified pension plans: has the time come?

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  • Alicia H. Munnell

Abstract

The U.S. Treasury estimates that personal income tax receipts in fiscal year 1992 would have been $51 billion higher without the special provisions accorded employer-sponsored pension plans. It is at best unclear that taxpayers are getting their moneys worth from this large tax expenditure. Despite a myriad of legislative changes, all of which combine to increase the likelihood that persons covered by pension plans will actually receive benefits, the U.S. pension system is still a very erratic and unpredictable way to provide retirement income and it benefits a relatively privileged subset of the population. ; This article argues that the time has come for the current taxation of compensation received in the form of deferred pension benefits. Such treatment is feasible, and is consistent with the broad definition of income envisioned under a comprehensive personal income tax and incorporated in the language of the Internal Revenue Code.

Suggested Citation

  • Alicia H. Munnell, 1992. "Current taxation of qualified pension plans: has the time come?," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 12-25.
    • Handle: RePEc:fip:fedbne:y:1992:i:mar:p:12-25
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    File URL: http://www.bostonfed.org/economic/neer/neer1992/neer292b.pdf
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    References listed on IDEAS

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    1. Raymond Goetz, 1969. "Tax Treatment of Pension Plans: Preferential or Normal?," Books, American Enterprise Institute, number 969074, September.
    2. Boskin, Michael J, 1978. "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 3-27, April.
    3. E. Philip Howrey & Saul H. Hymans, 1978. "The Measurement and Determination of Loanable-Funds Saving," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 9(3), pages 655-685.
    4. Michael J. Boskin, 1978. "Taxation, Saving, and the Rate of Interest," NBER Chapters, in: Research in Taxation, pages 3-27, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Zeynep Onder & Z.Nuray Guner, 1998. "The Bid-Ask Spread and its Determinants for Stocks Traded on the Istanbul Stock Exchange," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 2(8-7 Year ), pages 1-20.
    2. Ajit Singh, 1998. "Pension Reform, the Stock Market, Capital Formation and Economic Growth: A Critical Commentary on the World Bank’s Proposals," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 2(8-7), pages 51-78.
    3. Mahir Fusunoðlu, 1998. "Prospects for Private Pension Systems and their Relation to the Stock Market in Turkey," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 2(8-7), pages 90-104.
    4. Littlewood, Michael, 2014. "Ageing populations, retirement incomes and public policy: what really matters," MPRA Paper 56232, University Library of Munich, Germany.
    5. Susan St. John, 2007. "Farewell to Tax Neutrality: The Implications for an Aging Population," The Economic and Labour Relations Review, , vol. 18(1), pages 27-52, November.
    6. Polackova, Hana, 1997. "Population aging and financing of government liabilities in New Zealand," Policy Research Working Paper Series 1703, The World Bank.
    7. Davis, E.P. & DEC, 1993. "The structure, regulation, and performance of pension funds in nine industrial countries," Policy Research Working Paper Series 1229, The World Bank.
    8. Cagatay Ergenekon, 1998. "The Impact of Tax Regimes on the Development of Private Pension Funds: Reflections on the Capital Market," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 2(8-7), pages 105-117.
    9. Hans J. Blommestein, 1998. "Financial Market Implications of Pension Reforms," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 2(8-7), pages 79-89.

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    Keywords

    Pensions; Income tax;

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