TY  - JOUR
AU  - Goda,Gopi Shah
AU  - Shoven,John B.
AU  - Slavov,Sita Nataraj
TI  - Removing the Disincentives in Social Security for Long Careers
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13110
PY  - 2007
Y2  - May 2007
UR  - http://www.nber.org/papers/w13110
L1  - http://www.nber.org/papers/w13110.pdf
N1  - Author contact info:
Gopi Shah Goda
Stanford University
SIEPR
366 Galvez St.
Stanford, CA 94305
Tel: 650/736-0480
Fax: 650/723-8611
E-Mail: gopi@stanford.edu

John B. Shoven
Department of Economics
579 Serra Mall at Galvez Street
Stanford, CA 94305-6015
Tel: 650/723-3273
Fax: 650/723-8611
E-Mail: shoven@stanford.edu

Sita Slavov
Department of Economics
Occidental College
1600 Campus Road
Los Angeles, CA 90041
Tel: 323/259-1461
E-Mail: sslavov@oxy.edu
M1  - published as Gopi Shah Goda, John B. Shoven, Sita Nataraj Slavov. "Removing the Disincentives in Social Security for Long Careers," in Jeffrey Brown, Jeffrey Liebman and David A. Wise, editors, "Social Security Policy in a Changing Environment" University of Chicago Press (2009)

M3  - presented at "Retirement Research", October 19-22, 2006
AB  - Implicit taxes in Social Security, which measure Social Security contributions net of benefits accrued as a percentage of earnings, tend to increase over the life cycle.  In this paper, we examine the effects of three potential policy changes on implicit Social Security tax rates:  extending the number of years used in the Social Security formula from 35 to 40; allowing individuals who have worked more than 40 years to be exempt from payroll taxes; and distinguishing between lifetime low-income earners and high-income earners who work short careers.  These three changes can be achieved in a benefit- and revenue-neutral manner, and create a pattern of implicit tax rates that are much less distortionary over the life cycle, eliminating the high implicit tax rates faced by many elderly workers.  The effects of these policies on progressivity and women are also examined.
ER  -