NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Mattia Landoni

Cox School of Business
Southern Methodist University
6212 Bishop Blvd, Fincher 337
Dallas, TX 75275

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Southern Methodist University

NBER Working Papers and Publications

January 2020Should the Government be Paying Investment Fees on $3 Trillion of Tax-Deferred Retirement Assets?
with Stephen P. Zeldes: w26700
Under standard assumptions, both individuals and the government are indifferent between traditional tax-deferred retirement accounts and “front-loaded” (Roth) accounts. When we add investment fees to this benchmark, individuals are still indifferent but the government is not. We estimate that tax deferral increases demand for asset management services by $3 trillion, causing the government to pay $20.7 billion in corresponding annual fees. In a general equilibrium model with asset management services as differentiated products, we examine the incidence and welfare implications of the added demand. Tax deferral in our model produces a larger asset management industry, higher taxes, and lower social welfare.
 
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