How do contribution limits affect contributions to tax-preferred savings accounts?

• 成果类型: Article
• 署名作者: Milligan, K
• 署名单位: University of Toronto; University of British Columbia
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/S0047-2727(01)00136-0
• 发表日期: 2003
• 页码: 253-281
• 关键词: income tax; Saving

摘要

Contributions to tax-preferred savings accounts are typically constrained by a contribution limit. These limits influence contributions not only for taxpayers currently constrained by the limit, but also for those contributing less than the limit. I develop a simple life-cycle model in which taxpayers exhibit 'use it or lose it' contribution behavior. This connects current contributions to future contribution limits, and implies that an increase in contribution limits can decrease contributions. Empirical evidence from microdata provides support for the model. Using variation from Canadian limit reforms I find that larger future contribution room is associated with smaller contributions. (C) 2003 Elsevier Science B.V. All rights reserved.