HUMAN CAPITAL AND THE SOCIAL SECURITY TAX CAP

• 成果类型: Article
• 署名作者: Blandin, Adam
• 署名单位: Virginia Commonwealth University
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12525
• 发表日期: 2021
• 页码: 1599-1626
• 关键词: cross-country differences; progressive taxation; wage inequality; LABOR; earnings; retirement; MODEL

摘要

This article assesses the revenue potential of removing the Social Security payroll tax cap. I do so within an overlapping generations (OLG) model featuring heterogeneous agents who endogenously invest in risky human capital. Removing the tax cap leads to a sizable increase in Social Security revenues, but also produces a decrease in federal income tax revenues. Taking both Social Security and income taxes into account, removing the tax cap does not raise sufficient revenues to offset looming demographic changes. One factor limiting revenue gains is that removing the tax cap reduces aggregate output, with human capital investment playing a central role.