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Related Experiment Videos

Did tax reform hurt the elderly?

J R Gist1

  • 1Economics, Public Policy Institute, American Association of Retired Persons, Washington, DC 20049.

The Gerontologist
|August 1, 1992
PubMed
Summary

Federal and state tax reform increased taxes for the wealthiest elderly individuals by over 5%, while most seniors saw no change. This reform shifted tax burdens slightly from non-elderly to elderly populations.

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Area of Science:

  • Economics
  • Public Finance
  • Tax Policy Analysis

Background:

  • Recent federal and state income tax reforms have been implemented.
  • Previous trends since the late 1970s showed a shift in tax burdens away from the elderly.
  • Understanding the impact of tax reform on different demographic groups is crucial for policy evaluation.

Purpose of the Study:

  • To analyze the aggregate and distributional effects of recent federal and state income tax reforms on elderly taxpayers.
  • To determine how tax reform altered the income tax burden for older individuals across different income levels.
  • To assess the net shift in tax burdens between elderly and non-elderly populations resulting from the reforms.

Main Methods:

  • Analysis of aggregate federal and state tax payments before and after tax reform.
  • Examination of changes in tax burdens across income deciles, with a focus on the elderly population.
  • Calculation of mean and median changes in total income taxes paid by elderly taxpayers.

Main Results:

  • Aggregate federal tax payments for elderly taxpayers increased by approximately 5%, and state taxes by about 6%.
  • The entire increase in tax payments was concentrated among elderly individuals in the top income decile.
  • The median increase in taxes for the elderly was zero, as most did not pay federal or state income taxes.

Conclusions:

  • Recent tax reforms have disproportionately benefited lower-income elderly individuals by not increasing their tax burden.
  • The reforms resulted in a slight shift of income tax burdens from the non-elderly to the elderly population.
  • This shift reverses a long-standing trend of decreasing tax burdens on the elderly observed since the late 1970s.

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