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Macroeconomic Effects of Social Security and Tax Reform in the United States

Author/Editor: Bayoumi, Tamim | Botman, Dennis P. J. | Kumar, Manmohan S.
Authorized for Distribution: November 1, 2005
Electronic Access: Free Full Text (PDF file size is 153KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: We use the IMF's Global Fiscal Model to evaluate recent proposals to reform social security and the tax system in the United States. Introducing personal retirement accounts is unlikely to yield significant macroeconomic benefits unless it spurs additional fiscal consolidation to prevent a large increase in government debt. Similar benefits are obtained if the social security surplus is placed in a lockbox while maintaining the same debt target. Lowering the taxation of investment income is beneficial, but only if the reform is revenue neutral. Debtneutral social security and tax reform in the United States has large positive effects on the rest of the world.
 
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Series: Working Paper No. 05/208
Subject(s): Fiscal management | United States | Social security | Tax reforms | Economic models
Author's keyword(s): Personal retirement accounts | fiscal consolidation | tax reform | global fiscal model
 
English  
    Published:   November 1, 2005        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2005208   Pages:   22
    Price:   US$15.00 (Academic Rate: US$15.00 )
       
     
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