The effect of tax-based savings incentives on the self-employed

Power, Laura; Rider, Mark

doi:10.1016/s0047-2727(01)00092-5

Cited by 13 publications

(24 citation statements)

References 16 publications

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“…At the individual level, all but one specification returns a positive estimate ranging from 0.023 to 0.042, implying a semi‐elasticity from 0.15 to 0.26, which is of the same magnitude as previous studies (Collins & Wyckoff, ; Power & Rider, ). None of the estimates, however, is significant at the 10 per cent significance level.…”

Section: Regression Discontinuity Estimatessupporting

confidence: 79%

“…The first two columns report the treatment effect for the lower threshold. At the individual level, all linear specifications suggest that there is a small but insignificant increase in participation, which is equivalent to a semi‐elasticity of 0.09‐0.18, comparable to that of Power and Rider () and Collins and Wyckoff () . The estimates, however, are smaller when more flexible models are used.…”

Section: Regression Discontinuity Estimatesmentioning

confidence: 67%

“…The first two columns report the treatment effect for the lower threshold. At the individual level, all linear specifications suggest that there is a small but insignificant increase in participation, which is equivalent to a semielasticity of 0.09-0.18, comparable to that of Power and Rider (2002) and Collins and Wyckoff (1988 (at income of $80,000) 8 The semi-elasticity is calculated by using the coefficient divided by tax concessions (e.g. in the case of linear estimate on the 15-30 per cent jump, semielasticity is 0.18 = 0.027/(30-15 per cent)).…”

Section: Regression Discontinuity Estimates (I) Discontinuity At Mmentioning

confidence: 87%

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The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation

Feng

2014

Economic Record

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In this study, we examine choices in voluntary superannuation contributions by Australian income earners. In particular, we focus on salary sacrifice contributions, which could attract a tax benefit of up to 30 percentage points. This study aims to evaluate how effective tax incentives are in stimulating salary sacrifice participation. Using a regression discontinuity framework, we measure the response of individuals to different levels of tax concessions on salary sacrifice contributions. Results indicate that current tax incentives have a limited effect, if any, on the decision to make salary sacrifice arrangements. This result is consistent with more recent empirical research from the Northern Hemisphere. It is likely that the lack of response is due to the complexity of the incentive schemes in Australia and competing vehicles for long-term savings.

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Section: Regression Discontinuity Estimatessupporting

confidence: 79%

Section: Regression Discontinuity Estimatesmentioning

confidence: 67%

“…The first two columns report the treatment effect for the lower threshold. At the individual level, all linear specifications suggest that there is a small but insignificant increase in participation, which is equivalent to a semielasticity of 0.09-0.18, comparable to that of Power and Rider (2002) and Collins and Wyckoff (1988 (at income of $80,000) 8 The semi-elasticity is calculated by using the coefficient divided by tax concessions (e.g. in the case of linear estimate on the 15-30 per cent jump, semielasticity is 0.18 = 0.027/(30-15 per cent)).…”

Section: Regression Discontinuity Estimates (I) Discontinuity At Mmentioning

confidence: 87%

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The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation

Feng

2014

Economic Record

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“…The conclusion that firms, including the self‐employed, are quite responsive to health insurance tax incentives is echoed in studies of taxable income (Wu 2005) and the responsiveness of the self‐employed to tax incentives targeted at savings (Power and Rider 2002). The self‐employed are more likely to contribute to tax‐deferred retirement savings plans and contribute more as the after‐tax price declines.…”

Section: Previous Literaturementioning

confidence: 99%

Will Tax-Based Health Insurance Reforms Help the Self-Employed Stay in Business?

Gurley-Calvez

2010

Contemporary Economic Policy

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The self-employed face a tax-induced disadvantage relative to wage and salary workers when it comes to the payment of health insurance premiums. This paper uses a panel of individual tax return data to test whether lower health insurance premium costs because of an expanded tax incentive result in longer periods of self-employment. The results suggest that households claiming the deduction are indeed less likely to exit self-employment. Equalizing the treatment of health insurance premiums for the self-employed and wage workers by allowing full deductibility from Self-Employment Contributions Act (SECA) taxes would result in a 7% decrease in the probability of exit. (JEL H32, I18, L26)

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“…Similarly, few have exploited administrative records to examine their saving behavior. A rare example is Power and Rider (2002) who examine panel data made up of the income tax returns of Schedule C filers (proprietors) and study the pattern of the combined contributions to Keogh and individual retirement accounts (IRAs), including contributions to benefit their employees (reported on Schedule C), in response to changes in tax regimes.…”

Section: Introductionmentioning

confidence: 99%

Saving for retirement by the self-employed

Joulfaian¹

2017

Journal of Pension Economics and Finance

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When compared with wage earners, the self-employed are reported to have a lower take up rate of tax-favored retirement plans in the United States. Using panel data from federal income tax returns for the years 1999-2006, this paper explores the various factors that shape the observed pattern of contributions to such plans by the self-employed. Consistent with previous findings in the literature, contributions rise with income, tax rates, as well as savings in taxable accounts. More interestingly, the novel findings in this paper address the role that debt plays in shaping contributions. While housing and business-related debts are accorded similar tax treatment, the findings show that contributions decline with business debt whereas they rise with household debt.JEL CODES: H24, J26, L26

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The effect of tax-based savings incentives on the self-employed

Cited by 13 publications

References 16 publications

The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation

The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation

Will Tax-Based Health Insurance Reforms Help the Self-Employed Stay in Business?

Saving for retirement by the self-employed

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