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Unemployment Insurance Tax Burdens and Benefits: Funding Family Leave and Reforming the Payroll Tax

Patricia Anderson and Bruce Meyer

No 10043, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the distributional consequences of the UI payroll tax using representative individual microdata. We calculate taxes paid by individual wage and individual and household income deciles, incorporating the effects of multiple job holding and turnover. This tax distribution is compared with the distribution of UI benefits and benefits net of taxes, as well as to the burdens imposed by the federal income tax. We conclude that the UI payroll tax is indeed quite regressive. Within the context of the regular UI program, this regressivity is offset by the progressive nature of benefits, leaving the net benefit distribution progressive. We simulate a revenue-neutral increase to the OASDI level of the taxable wage base. The share of total UI taxes paid becomes fairly equal, and net benefits become positive across more deciles. Finally, we examine the effect of providing family leave within the UI system as recently proposed. We find that the share of such benefits going to relatively high-income groups is likely to be much larger than is the case for regular UI benefits.

JEL-codes: H2 J6 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ias, nep-lab and nep-pbe
Date: 2003-10
Note: LS PE
References: View references in EconPapers View complete reference list from CitEc
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Published as Anderson, Patricia M. and Bruce D. Meyer. "Unemployment Insurance Tax Burdens And Benefits: Funding Family Leave And Reforming The Payroll Tax," National Tax Journal, 2006, v59(1,Mar), 77-95.

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Journal Article: Unemployment Insurance Tax Burdens and Benefits: Funding Family Leave and Reforming the Payroll Tax (2006) Downloads
Working Paper: Unemployment Insurance Tax Burdens and Benefits: Funding Family Leave and Reforming the Payroll Tax (2005) Downloads
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