税收与储蓄-风险承担和财富

第六讲税收与储蓄，风险承担和财富,22,22.1TaxationandSavingsTheoryandEvidence22.2AlternativeModelsofSavings22.3TaxIncentivesforRetirementSavings22.4Conclusion,TaxesonSavings,22,Capitalincometaxation:Thetaxesleviedonthereturnsfromsavings.Thischapterexplores:Howcapitalincometaxationaffectsbehaviorintheoryandinpractice.HowcapitalincometaxationworksintheUnitedStates.,TaxesonSavings,22.1,Theintertemporalchoicemodelisthemainmodelforunderstandinghowtaxesaffectsavings.Intertemporalchoicemodel:Thechoiceindividualsmakeabouthowtoallocatetheirconsumptionovertime.Savings:Theexcessofcurrentincomeovercurrentconsumption.Themodelfocusesontradeoffbetweenconsumptiontodayandconsumptiontomorrow.,TaxationandSavings:TraditionalTheory,22.1,Jackhasincomefromworking.Jackchooseshowmuchtoconsumewhileworking()andwhileretired().Savingsisthedifferencebetweenincomeandfirst-periodconsumption,=.Savingsearnsinterest,andJackconsumesnetsavings:1+=(1+)(),JacksTwo-PeriodSavingsProblem,22.1,Intertemporalbudgetconstraint:Themeasureoftherateatwhichindividualscantradeoffconsumptioninoneperiodforconsumptioninanotherperiod.=1+Theopportunitycostofonedollaroffirstperiodconsumptionis(1+r)dollarsofsecondperiodconsumption.Taxesonsavingsaffectbehaviorbychangingtheeffectiveinterestrate,shiftingthebudgetconstraint.,JacksTwo-PeriodSavingsProblem,A,Consumptionwhileretiredinperiod2,CR,Consumptionwhileworkinginperiod1,CW,0,B,Budgetconstraint,BC1,BC2,Indifferencecurve,IC1,Yx(1+r),Yx(1+rx1),Sx(1+r),2,S,Y,1,Slope=(1+r),Slope=(1+rx1),22.1,ASimplifiedModel,1,22.1,Taxesandotherpricechangesaffectsavingsintwoways:Substitutioneffect:Lowerafter-taxinterestratescausefirst-periodconsumptiontorise,reducingsavings.Incomeeffect:Lowerafter-taxinterestratesreducethelifetimevalueofincome,reducingfirst-periodconsumptionandincreasingsavings.Substitutioneffectsmayseemmorenatural,buta“targetsavings”modelgeneratescompleteincomeeffects.,SubstitutionandIncomeEffectsofTaxesonSavings,CR,CW,0,A,B,BC1,BC2,IC1,Yx(1+r),Yx(1+rx1),S1x(1+r),1,2,S1,Y,1,Slope=(1+r),Slope=(1+rx1),IC2,2,S2,S2x(1+rx1),EffectofTaxesonSavings:SubstitutionEffectIsLarger,22.1,CR,CW,0,A,C,BC1,BC2,IC1,Yx(1+r),Yx(1+rx1),S1x(1+r),1,3,S1,Y,1,Slope=(1+r),Slope=(1+rx1),IC3,3,S3,S3x(1+rx1),22.1,EffectofTaxesonSavings:IncomeEffectIsLarger,22.1,Evidenceisambiguous:eithernoimpactorpositive.Studyingtheconnectionsbetweenafter-taxinterestratesandsavingsisadifficultproblem:Hardtomeasuretherelevantinterestrate.Interestonanytypeofsavingstypicallychangesovertimeinthesamewayforallindividuals,makingithardtofindappropriatetreatmentandcontrolgroupsforstudyinghowsavingsrespondtointerestratechanges.,Evidence:HowDoestheAfter-TaxInterestRateAffectSavings?,22.1,TheUnitedStatestaxesnominal,notreal,interestincome.Nominalinterestrate:Theinterestrateearnedbyagiveninvestment.Realinterestrate:Thenominalinterestrateminustheinflationrate;thismeasuresanindividualsactualimprovementinpurchasingpowerduetosavings.,InflationandCapitalTaxation,22.1,Therelationshipbetweenrealandnominalinterestratesis:=1+()1+()1Inflationincreasesthenominalbutnottherealinterestrate,buttaxesareleviedonnominalinterestrates.Inflationreducestherealafter-taxreturnonsavings.,InflationandCapitalTaxation,22.2,Thetraditionalmodelassumesthatpeopleonlysavetosmoothconsumption,nottoself-insure.Precautionarysavingsmodel:Amodelofsavingsinwhichindividualssave,atleastpartly,tosmoothconsumptionoverfutureuncertainties.Liquidityconstraintsmakeithardertoborrowintighttimes,sopeopledevelopa“bufferstock.”Liquidityconstraints:Barrierstocreditavailabilitythatlimittheabilityofindividualstoborrow.,PrecautionarySavingsModels,22.2,Theorypredictsthatsocialinsurancereducesprecautionarysavings.Chouetal.(2003)studytheintroductionofNationalHealthInsurance(NHI)inTaiwanin1995.AfterNHI,savingsfellamongthepublicButroseamongpeopleunaffectedbyNHI.IntheUnitedStates,Medicaidexpansionssignificantlyreducedthesavingsoflow-incomegroups.,EVIDENCE:SocialInsuranceandPersonalSavings,22.2,Individualsmaynotbeabletosaveasmuchastheywouldlikebecauseofself-controlproblems.Useofcommitmentdevicesisevidenceforthismodel:Christmasclubs,othertraditionaldevices,“savemoretomorrowplans.”Keepmoneyawayfromimpatient“short-runself.”Risingcreditcarddebt,risinghousingwealth.,Self-ControlModels,ThalerandBenartzi(2004)runanexperimentSubject:employeesatamidsizemanufacturingfirm“savemoretomorrow”plan,Self-ControlModels:ExperimentalEvidence,22.3,Employercontributionstopensionsaretax-deductible.Pensionplan:Anemployersponsoredplanthroughwhichemployersandemployeessaveona(generally)tax-freebasisfortheemployeesretirement.Definedbenefitpensionplans:Uponretirement,theworkersbenefitdependsontenureandearnings.Definedcontributionpensionplan:Employerssetasideacertainproportionofaworkersearningsinaninvestmentaccount,anduponretirement,theworkerreceivestheinvestmentandanyearnings.,TaxSubsidytoEmployer-ProvidedPensions,22.3,401(k)accountsandIRAsalsosubsidizesavings.401(k)accounts:Tax-preferredretirementsavingsvehiclesofferedbyemployers,towhichemployerswilloftenmatchemployeescontributions.IndividualRetirementAccount(IRA):Atax-favoredretirementsavingsvehicleprimarilyforlow-andmiddle-incometaxpayers,whomakepre-taxcontributionsandarethentaxedonfuturewithdrawals.,AvailableTaxSubsidiesforRetirementSavings,22.3,Formoderateincomehouseholds,IRAsworkasfollows:AlmostanyformofassetcanbeputinanIRA(fromstockstobondstoholdingsofgold).Individualscancontributeupto$5,000tax-freeeachyear(deductedfromtheirtaxableincome).InterestonIRAcontributionsaccumulatestax-free.Canwithdrawalfrom59.5;withdrawalshavetostartatage70.IRAbalancesaretaxedasincomeonwithdrawal.,IndividualRetirementAccounts,22.3,Withtax-preferredretirementsavings,yougettoholdontoanytaxesyouwouldhavepaidonbothyourinitialcontributionandanyinterestearnings,Andyougettoearntheinterestonthemoneythatwouldhaveotherwisebeenpaidintaxes.,WhyDoTaxSubsidiesRaisetheReturntoSavings?,22.3,WhyDoTaxSubsidiesRaisetheReturntoSavings?,22.3,TheoreticalEffectsofTax-SubsidizedRetirementSavings,Taxsubsidiesforretirementsavingsincreasetheaftertaxreturntosavingsbyreducingthetaxratefromto.Thiscanencouragesavingsthroughthesubstitutioneffect,ordiscourageitthroughtheincomeeffect.ButIRAcontributionsarecapped,sothereisonlyanincomeeffectforhighsavers.Highsaverswilljustreshuffletheirassetsfromnon-IRAtoIRAaccounts.,C,B,CR,CW,A,BC3,BC2,Yx(1+r1-),Yx(1+rx1),2,3,S4,Y,2,Slope=(1+r1-),3,S2,S2x(1+rx1),4,4,Slope=(1+rx1),S3,?,TheoreticalEffectsofTax-SubsidizedRetirementSavings,22.3,22.3,LimitationsonTax-SubsidizedRetirementSavings,A,CR,CW,Yx(1+rx1),BC2,BC1,B,C,?,Y,1,2,3,S3=$500,S1=$1,000,S2=$1,500,slope=(1+rx1),slope=(1+rx1),EffectofTax-SubsidizedRetirementSavingsforLowSavers,22.3,A,CR,CW,Yx(1+rx1),BC2,BC1,B,Y,1,2,S1=$6,000,S2=$5,000,slope=(1+rx1),slope=(1+rx1),EffectofTax-SubsidizedRetirementSavingsonHighSavers,22.3,22.3,CongressintroducedtheRothIRAin1997.RothIRA:AvariationonnormalIRAstowhichtaxpayersmakeafter-taxcontributionsbutmaythenmaketax-freewithdrawalslaterinlife.SimilartoaregularIRA,butwithtwokeydifferences:Individualscontributeafter-taxdollarstoaRothIRA,butmaketaxfreewithdrawals.Individualsareneverrequiredtowithdraw,soearningsonassetscanbuilduptax-freeindefinitely.ProvidesmoregeneroustaxsubsidythanregularIRA.,APPLICATION:TheRothIRA,22.3,Impactoftaxsubsidiesforsavingsonnationalsavingsdependsonthemarginalandinframarginalresponses.Thesizeofthemarginalandinframarginalresponsetotaxincentivesforsavingswilldependontwofactors:Thesizeoftheincomeandsubstitutioneffectsforretirementsaversbelowthesavingslimit.Theshareofretirementsaverswhoareabovethesavingslimit,forwhomthereisonlyaninframarginalresponse.,Privatevs.NationalSavings,Exercise,Supposethatapersonlivesfortwoperiods,earning$30,000inincomeinperiod1,duringwhichsheconsumesorsavesforperiod2.whatissavedearnsinterestof10%.A.drawthatpersonsintertemporalbudgetconstraint.B.drawthatpersonsintertemporalbudgetconstraintifthegovernmenttaxesinterestattherateof30%.,23,23.1TaxationandRiskTaking23.2CapitalGainsTaxation23.3TransferTaxation23.4PropertyTaxation,TaxesonRiskTakingandWealth,23,WarrenBuffettplanstogiveaway85%ofhiswealthtocharityratherthanbequeathingittohisownchildren.Buffetarguesthatenormousbequestsspoilchildren.TheestatetaxpreservesAmericasmeritocracy.Othersopposetheestatetaxbecauseitconstitutesdoubletaxation.“deathtax”Howshouldwealthandrisktakingbetaxed?,TaxesonRiskTakingandWealth,23.1,Howdotakesonrisk-takingaffectbehavior?Taxingwins,deductinglossesdoesntaffectbehavior.Butprogressivetaxes,ortaxeswithoutanoffsetforlosses,doaffectbehavior.Taxlossoffset:Theextenttowhichtaxpayerscandeductnetlossesoninvestmentsfromtheirtaxableincome.Overall,noclearpredictiononhowtaxesaffectrisktaking,andlittleempiricalevidence.,BasicFinancialInvestmentModel,23.1,Considera$100investmentopportunitythatpaysout$120halfthetimeand$80halfthetime.Thishasanexpectedvalueofzero.Expectedreturn:Thereturntoasuccessfulinvestmenttimestheoddsofsuccess,plusthereturntoanunsuccessfulinvestmenttimestheoddsoffailure,BasicFinancialInvestmentModel,23.1,SomeTaxesonRiskTakingCanBeUndone,23.2,Taxesapplytocapitalgainsaswellasearnedincome.Capitalgain:Thedifferencebetweenanassetspurchasepriceanditssaleprice.Currently,capitalgainsaretaxedonrealization.Interestincomeistaxedataccrual.Taxationonaccrual:Taxespaideachperiodonthereturnearnedbyanassetinthatperiod.Taxationonrealization:Taxespaidonanassetsreturnonlywhenthatassetissold.,CapitalGainsTaxation,23.2,Twolargepreferencesforcapitalgains:“Step-Up”ofBasisatDeath:Assetstransferredatdeathgetanewbasis,taxfree.Basis:Thepurchasepriceofanasset,forpurposesofdeterminingcapitalgains.ExclusionforCapitalGainsonHousing:ThetaxcodeintheUnitedStateshastraditionallyfeaturedanexclusionforcapitalgainsonhouses.,CurrentTaxTreatmentofCapitalGains,23.2,Capitalgainstaxedatalowerratethanearnedincome:19781986:Taxappliedtoonly40%ofcapitalgainsonassetsheldformorethansixmonths.1986:Treatedcapitalgainslikeallotherincome.1993:Raisedtoptaxratesonotherformsofincometo39%,keptthetopcapitalgainsrateat28%.1997:Toprateonlong-termcapitalgainsfellto20%2003:Topratefellto15%.,CapitalGainsTaxRatesthroughtheYears,23.2,ProtectionagainstInflationBecauseofinflation,currenttaxpolicyoverstatesthevalueofcapitalgains.Butbettertoindexforinflation.ImprovedEfficiencyofCapitalTransactionsToreducePDVofcapitalgainstax,individualsdelaysaleofassets.Butthisreducesthefluidityofthecapitalmarket,andmayhurtitsperformance.,ArgumentsforTaxPreferencesforCapitalGains,ArgumentsforTaxPreferencesforCapitalGains,23.2,EncouragingEntrepreneurialActivityEntrepreneursearnincomebyincreasingthevalueoftheircompanies,whichisacapitalgain.Capitalgainstaxratesareabluntinstrumentforencouragingentrepreneurship.Instead,useaprospectivecapitalgainstaxreduction.Prospectivecapitalgainstaxreduction:Capitalgainstaxcutsthatapplyonlytoinvestmentsmadefromthisdayforward.,23.2,EvidenceonTaxationandCapitalGains,Howdoesthecapitalgainstaxrateaffectcapitalgains?Keyquestionindetermininghowcapitalgainsshouldbetaxed.In1986,acapitalgainstaxincreasewasannounced,togointoeffectin1987.Capitalgainsspikedin1986Butdidntfallbelowtheir1985levelsin1987.Thetaxhikehadnolong-runeffectoncapitalgains.,23.2,EvidenceonTaxationandCapitalGains,23.2,Capitalgainstaxesareveryprogressive.CapitalgainsincomeaccruesprimarilytotherichesttaxpayersintheUnitedStates.LowertaxratesoncapitalgainsviolatetheHaig-Simonsprinciplefortaxsystems.Thegoaloftaxationshouldbetoprovidealevelplayingfieldacrosseconomicchoices,nottofavoronechoiceoveranother,unlessthereissomeequityorefficiencyargumentfordoingso.,WhatAretheArgumentsagainstTaxPreferencesforCapitalGains?,23.2,RepublicanpresidentialcandidateMittRomneypaidanaveragetaxrateof14%on$42millionofincomein2010and2011.Hisincomewastaxedas“carriedinterest”earnedontheassetshemanagedatBainCapital.Preferentialtreatmentof“carriedinterest”intendedtocompensateforhighriskthatassetmanagersface.ButitisaviolationoftheHaig-Simonsprinciple,andmanyeconomistsopposeit.,APPLICATION:CapitalGainsTaxationof“CarriedInterest”,23.3,TransfertaxesareanimportantcapitaltaxintheUnitedStates.Transfertax:Ataxleviedonthetransferofassetsfromoneindividualtoanother.Gifttax:Ataxleviedonassetsthatoneindividualgivestoanotherintheformofagift.Estatetax:Ataxleviedontheassetsofthedeceasedthatarebequeathedtoothers.,TransferTaxation,23.3,TransferandWealthTaxes(%ofGovernmentRevenue),23.3,Whytaxwealthratherthanincome?Extremelyprogressivemeansofraisingrevenue.Necessarytoavoidtheexcessiveconcentrationofwealthandpowerinafewwealthydynasties.Allowingchildrenofwealthyfamiliestoinheritalltheirparentswealthsapsthemofallmotivationtoworkhardandachievetheirownsuccess.,WhyTaxWealth?ArgumentsfortheEstateTax,23.3,Whynottaxwealth?A“DeathTax”IsCruel:Itismorallyinappropriatetotaxindividualsupontheirdeath.TheEstateTaxAmountstoDoubleTaxation:Youaretaxedonincomewhenyouearnitandthenyourchildrenareta