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Taxing Pensions

Author

Listed:
  • Cremer, Helmuth

    (Toulouse School of Economics)

  • Pestieau, Pierre

    (CREPP, Université de Liège)

Abstract

There exists a wide variety of tax treatments of pensions across the world. And the reasons for such a range of regimes are not clear. This note reviews the general principles of pension taxes and analyses the theoretical foundations of why pension incomes ought to be taxed specifically. To do this, one has to distinguish between public and private pensions. The design of public pensions cannot be separated from the one of taxation. Regarding private pensions, the key issue is whether or not pension saving ought to be treated differently from other forms of saving.

Suggested Citation

  • Cremer, Helmuth & Pestieau, Pierre, 2016. "Taxing Pensions," IZA Discussion Papers 9821, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9821
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    References listed on IDEAS

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    1. Cremer, Helmuth & Pestieau, Pierre, 2011. "Myopia, redistribution and pensions," European Economic Review, Elsevier, vol. 55(2), pages 165-175, February.
    2. Cremer, Helmuth & Pestieau, Pierre & Rochet, Jean-Charles, 2003. "Capital income taxation when inherited wealth is not observable," Journal of Public Economics, Elsevier, vol. 87(11), pages 2475-2490, October.
    3. (IFS), Institute for Fiscal Studies & Mirrlees, James (ed.), 2011. "Tax By Design: The Mirrlees Review," OUP Catalogue, Oxford University Press, number 9780199553747.
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    5. Atkinson, A B & Sandmo, A, 1980. "Welfare Implications of the Taxation of Savings," Economic Journal, Royal Economic Society, vol. 90(359), pages 529-549, September.
    6. Diamond, Peter, 2010. "Taxes and Pensions," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 59-74.
    7. Helmuth Cremer, 2003. "Multi-dimensional Heterogeneity and the Design of Tax Policies," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 4(1), pages 35-45, December.
    8. Jean‐Marie Lozachmeur, 2006. "Optimal Age‐Specific Income Taxation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(4), pages 697-711, October.
    9. Cremer, Helmuth & Lozachmeur, Jean-Marie & Pestieau, Pierre, 2004. "Social security, retirement age and optimal income taxation," Journal of Public Economics, Elsevier, vol. 88(11), pages 2259-2281, September.
    10. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
    11. Philippe Choné & Guy Laroque, 2014. "Income Tax and retirement Schemes," Working Papers 2014-07, Center for Research in Economics and Statistics.
    12. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1.
    13. Auerbach, Alan J., 2012. "The Mirrlees Review: A U.S. Perspective," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(3), pages 685-708, September.
    14. Katarzyna Romaniuk, 2013. "Pension fund taxation and risk-taking: should we switch from the EET to the TEE regime?," Annals of Finance, Springer, vol. 9(4), pages 573-588, November.
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    16. Robin Boadway & David Wildasin, 1994. "Taxation and savings: a survey," Fiscal Studies, Institute for Fiscal Studies, vol. 15(3), pages 19-63, August.
    17. Peter Diamond, 2009. "Taxes and Pensions," Southern Economic Journal, John Wiley & Sons, vol. 76(1), pages 2-15, July.
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    Citations

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    Cited by:

    1. Woodland, A., 2016. "Taxation, Pensions, and Demographic Change," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 713-780, Elsevier.
    2. Salvador Barrios & Francesco Figari & Luca Gandullia & Sara Riscado, 2016. "The fiscal and equity impact of tax expenditures in the European Union," JRC Working Papers on Taxation & Structural Reforms 2016-01, Joint Research Centre.

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    More about this item

    Keywords

    social security; deferred tax; private pensions; retirement;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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