The Tax Benefit of Income Smoothing

Kristian Rydqvist, Joshua Spizman and Steven Schwartz

No 8425, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: A worker can contribute pre-tax dollars to a private pension plan. Under a progressive tax, this feature reduces income taxes. Ippolito (1986} argues that an individual in 1979 can reduce lifetime taxes by 20%. We re-examine his analysis using the complete time-series of US income tax history and find that the tax benefit of income smoothing is much smaller.

Keywords: Income tax history; Private pensions; Tax progressivity (search for similar items in EconPapers)
JEL-codes: D91 G11 G18 G23 H24 (search for similar items in EconPapers)
Date: 2011-06
New Economics Papers: this item is included in nep-acc, nep-his and nep-pub
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