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Income Tax Preferences for the Elderly

Author

Listed:
  • Karen Smith Conway

    (University of New Hampshire, Durham)

  • Jonathan C. Rork

    (Georgia State University, Atlanta)

Abstract

This research investigates the evolution of federal and state income tax preferences for the elderly during the past twenty-five years. Documenting how various types of income tax preferences have changed reveals that state tax policies are not simply mimicking federal tax law. It also shows a divergence in how the different types of state preferences have evolved. The authors explore two explanations for these patterns: the political power of the elderly and state tax competition. They construct a summary measure using representative household profiles created from the Current Population Survey and the TAXSIM calculator for 1977 to 2002. Several patterns emerge that are consistent with both explanations, but data limitations make it difficult to obtain definitive results. The most salient finding is that a proportionately large elderly population is associated with less generous tax preferences for the elderly, which is consistent with a ``program cost'' rather than ``preference'' effect of an aging population.

Suggested Citation

  • Karen Smith Conway & Jonathan C. Rork, 2008. "Income Tax Preferences for the Elderly," Public Finance Review, , vol. 36(5), pages 523-562, September.
    • Handle: RePEc:sae:pubfin:v:36:y:2008:i:5:p:523-562
    DOI: 10.1177/1091142108316441
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    References listed on IDEAS

    as
    1. Casey B. Mulligan & Xavier Sala-i-Martin, 1999. "Gerontocracy, retirement, and social security," Economics Working Papers 383, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Vincenzo Galasso & Paola Profeta, 2004. "Lessons for an ageing society: the political sustainability of social security systems [‘Assessing dynamic efficiency: theory and evidence’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 19(38), pages 64-115.
    3. repec:oup:ecpoli:v:19:y:2004:i:38:p:63-115 is not listed on IDEAS
    4. Karen Smith Conway & Jonathan C. Rork, 2004. "Diagnosis Murder: The Death of State Death Taxes," Economic Inquiry, Western Economic Association International, vol. 42(4), pages 537-559, October.
    5. Jon Bakija & Joel Slemrod, 2004. "Do the Rich Flee from High State Taxes? Evidence from Federal Estate Tax Returns," Department of Economics Working Papers 2004-12, Department of Economics, Williams College.
    6. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
    7. Slavov Sita Nataraj, 2006. "Age Bias in Fiscal Policy: Why Does the Political Process Favor the Elderly?," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-39, October.
    8. Mulligan, Casey B. & Sala-i-Martin, Xavier, 1999. "Gerontocracy, Retirement, and Social Security," Working Papers 154, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Lucie Schmidt & Purvi Sevak, 2006. "Taxes, Wages, and the Labor Supply of Older Americans," Working Papers wp139, University of Michigan, Michigan Retirement Research Center.
    2. Hiroyuki Yashio & Keishi Hachisuka, 2014. "Impact of Population Aging on the Personal Income Tax Base in Japan : Simulation Analysis of Taxation on Pension Benefits Using Micro Data," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 10(3), pages 519-542, October.
    3. Schaltegger, Christoph A. & Somogyi, Frank & Sturm, Jan-Egbert, 2011. "Tax competition and income sorting: Evidence from the Zurich metropolitan area," European Journal of Political Economy, Elsevier, vol. 27(3), pages 455-470, September.
    4. Ben Brewer & Karen Smith Conway & Jonathan C. Rork, 2022. "Do income tax breaks for the elderly affect economic growth?," Contemporary Economic Policy, Western Economic Association International, vol. 40(1), pages 7-27, January.
    5. Jie Pan & Gary Wagner, 2011. "The Effect of State Tax Preferences on the Living Arrangements of Elderly Individuals," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(2), pages 193-210, May.

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