earnings responses to increases in payroll taxes by liebman and saez
DESCRIPTION
Earnings Responses to Increases in Payroll Taxes by Liebman and Saez. Discussion by Leora Friedberg, University of Virginia and NBER Conference on “Pathways to a Secure Retirement”. Raising the payroll tax limit. Google on “Social Security reform proposals”. Raising the payroll tax limit. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/1.jpg)
Earnings Responses to Earnings Responses to Increases in Payroll Increases in Payroll
TaxesTaxes
by Liebman and Saezby Liebman and Saez
Discussion by Leora Friedberg,Discussion by Leora Friedberg,University of Virginia and NBERUniversity of Virginia and NBER
Conference on Conference on ““Pathways to a Secure Retirement”Pathways to a Secure Retirement”
![Page 2: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/2.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform Google on “Social Security reform proposals”proposals”
![Page 3: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/3.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform Google on “Social Security reform proposals”proposals”1. www.whitehouse.gov – not really1. www.whitehouse.gov – not really
![Page 4: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/4.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform Google on “Social Security reform proposals”proposals”1. 1. www.whitehouse.govwww.whitehouse.gov – not really – not really
““He [Bush] will listen to any good idea that He [Bush] will listen to any good idea that does not include raising payroll taxes.”does not include raising payroll taxes.”
![Page 5: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/5.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform Google on “Social Security reform proposals”proposals”1. 1. www.whitehouse.govwww.whitehouse.gov – not really – not really
2. 2. www.brookings.eduwww.brookings.edu – yes – yes
![Page 6: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/6.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform Google on “Social Security reform proposals”proposals”1. 1. www.whitehouse.govwww.whitehouse.gov – not really – not really
2. 2. www.brookings.eduwww.brookings.edu – yes – yes
3. 3. www.cato.orgwww.cato.org – no – no
![Page 7: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/7.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform Google on “Social Security reform proposals”proposals”1. 1. www.whitehouse.govwww.whitehouse.gov – not really – not really
2. 2. www.brookings.eduwww.brookings.edu – yes – yes
3. 3. www.cato.orgwww.cato.org – no – no
same as 5. same as 5. www.socialsecurity.orgwww.socialsecurity.org
![Page 8: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/8.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform Google on “Social Security reform proposals”proposals”1. 1. www.whitehouse.govwww.whitehouse.gov – not really – not really
2. 2. www.brookings.eduwww.brookings.edu – yes – yes
3, 5. 3, 5. www.cato.orgwww.cato.org – no – no
![Page 9: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/9.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform Google on “Social Security reform proposals”proposals”1. 1. www.whitehouse.govwww.whitehouse.gov – not really – not really
2. 2. www.brookings.eduwww.brookings.edu – yes – yes
3, 5. 3, 5. www.cato.orgwww.cato.org – no – no
7. 7. www.heritage.orgwww.heritage.org – no – no
![Page 10: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/10.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform Google on “Social Security reform proposals”proposals”1. 1. www.whitehouse.govwww.whitehouse.gov – not really – not really
2. 2. www.brookings.eduwww.brookings.edu – yes – yes
3, 5. 3, 5. www.cato.orgwww.cato.org – no – no
7. 7. www.heritage.orgwww.heritage.org – no – no
9. 9. www.ksg.harvard.edu/jeffreyliebmanwww.ksg.harvard.edu/jeffreyliebman – yes – yes
![Page 11: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/11.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform Google on “Social Security reform proposals”proposals”1. 1. www.whitehouse.govwww.whitehouse.gov – not really – not really
2. www.brookings.edu – yes2. www.brookings.edu – yes
3, 5. www.cato.org – no3, 5. www.cato.org – no
7. www.heritage.org – no7. www.heritage.org – no
9. www.ksg.harvard.edu/jeffreyliebman – yes9. www.ksg.harvard.edu/jeffreyliebman – yes
same as 11. voxbaby.blogspot.comsame as 11. voxbaby.blogspot.com
![Page 12: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/12.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform proposals”Google on “Social Security reform proposals”1. www.whitehouse.gov – not really1. www.whitehouse.gov – not really
2. www.brookings.edu – yes2. www.brookings.edu – yes
3, 5. www.cato.org – no3, 5. www.cato.org – no
7. www.heritage.org – no7. www.heritage.org – no
9, 11. www.ksg.harvard.edu/jeffreyliebman – yes9, 11. www.ksg.harvard.edu/jeffreyliebman – yes
![Page 13: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/13.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform proposals”Google on “Social Security reform proposals”1. www.whitehouse.gov – not really1. www.whitehouse.gov – not really
2. www.brookings.edu – yes2. www.brookings.edu – yes
3, 5. www.cato.org – no3, 5. www.cato.org – no
7. www.heritage.org – no7. www.heritage.org – no
9, 11. www.ksg.harvard.edu/jeffreyliebman – yes9, 11. www.ksg.harvard.edu/jeffreyliebman – yes
15. www.ncpa.org – vague, probably not15. www.ncpa.org – vague, probably not
![Page 14: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/14.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Google on “Social Security reform proposals”Google on “Social Security reform proposals”1. www.whitehouse.gov – not really1. www.whitehouse.gov – not really
2. www.brookings.edu – yes2. www.brookings.edu – yes
3, 5. www.cato.org – no3, 5. www.cato.org – no
7. www.heritage.org – no7. www.heritage.org – no
9, 11. www.ksg.harvard.edu/jeffreyliebman – yes9, 11. www.ksg.harvard.edu/jeffreyliebman – yes
15. www.ncpa.org – vague, probably not15. www.ncpa.org – vague, probably not
21. www.house.gov/defazio – yes21. www.house.gov/defazio – yes
![Page 15: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/15.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply
![Page 16: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/16.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply alters return to earning wagesalters return to earning wages
![Page 17: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/17.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply alters return to earning wagesalters return to earning wages
pre-tax earnings
post-tax earnings
slope 1-inc-payroll
1-inc
$90,000
![Page 18: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/18.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply alters return to earning wagesalters return to earning wages
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 19: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/19.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 20: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/20.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 21: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/21.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 22: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/22.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply empirical test #1empirical test #1
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 23: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/23.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply empirical test #1empirical test #1
resultsresults
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 24: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/24.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply empirical test #1empirical test #1
results: people don’t avoid “reverse kink”results: people don’t avoid “reverse kink”
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 25: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/25.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplypeople don’t avoid “reverse kink”, either people don’t avoid “reverse kink”, either
because … because …
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 26: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/26.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplypeople don’t avoid “reverse kink”, either because people don’t avoid “reverse kink”, either because
… …
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
X
![Page 27: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/27.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplypeople don’t avoid “reverse kink”, either because … people don’t avoid “reverse kink”, either because …
labor supply is very inelasticlabor supply is very inelastic
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
X
![Page 28: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/28.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplypeople don’t avoid “reverse kink”, or else people don’t avoid “reverse kink”, or else
because … because …
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 29: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/29.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplypeople don’t avoid “reverse kink”, or else people don’t avoid “reverse kink”, or else
because … because …
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
?X
![Page 30: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/30.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplypeople don’t avoid “reverse kink”, or else because … people don’t avoid “reverse kink”, or else because …
they’re confusedthey’re confused
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
?X
![Page 31: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/31.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 32: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/32.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplyof raising payroll tax limitof raising payroll tax limit
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 33: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/33.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplyof raising payroll tax limitof raising payroll tax limit
pre-tax earnings
post-tax earnings
$90,000
slope 1-inc- 0.124
1-inc
![Page 34: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/34.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplyof eliminating payroll tax limitof eliminating payroll tax limit
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 35: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/35.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplyof eliminating payroll tax limitof eliminating payroll tax limit
pre-tax earnings
post-tax earnings
$90,000
slope 1-inc- 0.124
![Page 36: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/36.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply
pre-tax earnings
post-tax earnings
slope 1-inc- 0.124
1-inc
$90,000
![Page 37: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/37.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supply(more accurate)(more accurate)
pre-tax earnings
post-tax earnings
$90,000
slope 1-inc1
-
0.124
1-inc2
- 0.124
1-inc2
![Page 38: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/38.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplyof changing income tax rates on high earnersof changing income tax rates on high earners
pre-tax earnings
post-tax earnings
$90,000
slope 1-inc1
-
0.124
1-inc2
- 0.124
1-inc2
![Page 39: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/39.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplyof changing income tax rates on high earnersof changing income tax rates on high earners
pre-tax earnings
post-tax earnings
$90,000
slope 1-inc1
-
0.124
1-’inc2
- 0.124
1-’inc2
![Page 40: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/40.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplyof changing income tax rates on high earnersof changing income tax rates on high earners
empirical test #2’empirical test #2’
pre-tax earnings
post-tax earnings
$90,000
slope 1-inc1
-
0.124
1-’inc2
- 0.124
1-’inc2
![Page 41: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/41.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplyof changing income tax rates on high earnersof changing income tax rates on high earners
pre-tax earnings
post-tax earnings
$90,000
slope 1-inc1
-
0.124
1-’inc2
- 0.124
1-’inc2
![Page 42: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/42.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplyof changing income tax rates on high earnersof changing income tax rates on high earners
pre-tax earnings
post-tax earnings
$90,000
slope 1-inc1
-
0.124
1-’’inc2
- 0.124
1-’’inc2
![Page 43: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/43.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Impact on labor supplyImpact on labor supplyof changing income tax rates on high earnersof changing income tax rates on high earners
empirical test #2’’empirical test #2’’
pre-tax earnings
post-tax earnings
$90,000
slope 1-inc1
-
0.124
1-’’inc2
- 0.124
1-’’inc2
![Page 44: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/44.jpg)
Raising the payroll tax limitRaising the payroll tax limit
SummarySummary#1 little evidence that people avoid “reverse #1 little evidence that people avoid “reverse
kink”kink”
#2’ little evidence that labor supply increased #2’ little evidence that labor supply increased following TRA 86following TRA 86
#2’’ little evidence that labor supply decreased #2’’ little evidence that labor supply decreased following OBRA 93following OBRA 93
![Page 45: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/45.jpg)
Raising the payroll tax limitRaising the payroll tax limit
SummarySummary#1 little evidence that people avoid “reverse #1 little evidence that people avoid “reverse
kink”kink”
#2’ little evidence that labor supply increased #2’ little evidence that labor supply increased following TRA 86following TRA 86
#2’’ little evidence that labor supply decreased #2’’ little evidence that labor supply decreased following OBRA 93following OBRA 93
![Page 46: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/46.jpg)
Raising the payroll tax limitRaising the payroll tax limit
SummarySummary#1 little evidence that people avoid “reverse #1 little evidence that people avoid “reverse
kink”kink”
#2’ little evidence that labor supply increased #2’ little evidence that labor supply increased following TRA 86following TRA 86
#2’’ little evidence that labor supply decreased #2’’ little evidence that labor supply decreased following OBRA 93following OBRA 93
![Page 47: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/47.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Policy implicationPolicy implicationcould raise payroll tax limit could raise payroll tax limit
without adverse effects on labor supply, tax without adverse effects on labor supply, tax revenuerevenue
CaveatsCaveatsdata: not very recentdata: not very recent
underlying assumptions: what if labor demand is underlying assumptions: what if labor demand is not perfectly elastic?not perfectly elastic?
policy implication: what if raising payroll tax policy implication: what if raising payroll tax limit reduces confusion?limit reduces confusion?
![Page 48: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/48.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Policy implicationPolicy implicationcould raise payroll tax limit could raise payroll tax limit
without adverse effects on labor supply, tax without adverse effects on labor supply, tax revenuerevenue
CaveatsCaveatsdata: not very recentdata: not very recent
underlying assumptions: what if labor demand is underlying assumptions: what if labor demand is not perfectly elastic?not perfectly elastic?
policy implication: what if raising payroll tax policy implication: what if raising payroll tax limit reduces confusion?limit reduces confusion?
![Page 49: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/49.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Policy implicationPolicy implicationcould raise payroll tax limit could raise payroll tax limit
without adverse effects on labor supply, tax without adverse effects on labor supply, tax revenuerevenue
CaveatsCaveatsdata: not very recentdata: not very recent
underlying assumptions: what if labor demand is underlying assumptions: what if labor demand is not perfectly elastic?not perfectly elastic?
policy implication: what if raising payroll tax policy implication: what if raising payroll tax limit reduces confusion?limit reduces confusion?
![Page 50: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/50.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Policy implicationPolicy implicationcould raise payroll tax limit could raise payroll tax limit
without adverse effects on labor supply, tax without adverse effects on labor supply, tax revenuerevenue
CaveatsCaveatsdata: not very recentdata: not very recent
underlying assumptions: what if labor demand is underlying assumptions: what if labor demand is not perfectly elastic?not perfectly elastic?
policy implication: what if raising payroll tax policy implication: what if raising payroll tax limit reduces confusion?limit reduces confusion?
![Page 51: Earnings Responses to Increases in Payroll Taxes by Liebman and Saez](https://reader033.vdocuments.us/reader033/viewer/2022051622/56814f35550346895dbccd3e/html5/thumbnails/51.jpg)
Raising the payroll tax limitRaising the payroll tax limit
Policy implicationPolicy implicationcould raise payroll tax limit could raise payroll tax limit
without adverse effects on labor supply, tax without adverse effects on labor supply, tax revenuerevenue
CaveatsCaveatsdata: not very recentdata: not very recent
underlying assumptions: what if labor demand is underlying assumptions: what if labor demand is not perfectly elastic?not perfectly elastic?
policy implication: what if raising payroll tax policy implication: what if raising payroll tax limit reduces confusion?limit reduces confusion?