Tax-Benefit Ratios and Rates of Return under OASI: 1974 Retirees and Entrants

This paper is concerned with the question whether workers gain or lose on their taxes for social security (OASI). Tax-benefit ratio (T/B) and rate of return (RR) are the two measures by which to determine how they fare under the system. T/B and RR are affected by earnings level of the worker, time p...

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Bibliographic Details
Published in:The Journal of risk and insurance 1974-06, Vol.41 (2), p.189-206
Main Authors: Chen, Yung-Ping, Chu, Kwang-Wen
Format: Article
Language:English
Subjects:
Age
Computer simulation
Estimated taxes
Income taxes
Insurance, Social
Investment return rates
Rates of return
Ratios
Retirees
Retirement
Retirement benefits
Social security
Social Security benefits
Social security tax
Statistical data
Tax aspects
Tax benefits
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Summary:This paper is concerned with the question whether workers gain or lose on their taxes for social security (OASI). Tax-benefit ratio (T/B) and rate of return (RR) are the two measures by which to determine how they fare under the system. T/B and RR are affected by earnings level of the worker, time period of paying taxes and drawing benefits, whether the employer's tax is shifted to the worker, types of benefits received, rates of interest and of price inflation. A computer simulation program is utilized to produce T/B and RR for 1974 retirees and 1974 entrants (age 22 and age 18). T/B for 1974 retirees range from.05 to.46; their RR vary between 6.1 percent and 16.9 percent. T/B for 22 year-old 1974 entrants are from.22 to 1.57; their RR, from 1.4 percent to 8.5 percent. T/B for 18 year-old 1974 entrants are from.25 to 1.86; their RR, from 1.1 percent to 7.7 percent.
ISSN:0022-4367
1539-6975
DOI:10.2307/252170