Distributional Implications of Social Security Reform for the Elderly: The Impact of Revising COLAs, the Normal Retirement Age, and the Taxation of Benefits

Richard W. Johnson

National Tax Journal, 1999, vol. 52, issue 3, 505-30

Abstract: Several reform plans have been proposed to reduce the financial strain on Social Security. Many proposals under consideration, however, would exacerbate the inequality of income among the elderly. Using data from the Current Population Survey, this paper finds that reducing cost-of-living escalators, even when the reforms are designed to protect low-income beneficiaries, would generally worsen inequality over time and increase the number of elders with income below the poverty level. Raising the retirement age would generate similar results. However, increasing taxes on retirement benefits would improve the financial outlook for Social Security without imposing additional hardships on the poorest elderly.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:52:y:1999:i:3:p:505-30

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