Class Notes 042108 Framework for Soc Security Analysis

Class Notes 042108 - Framework for Social Security Analysis So Far 1 Individual tax benefit rules 2 Aggregate Social Security Budget Framework

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Framework for Social Security Analysis So Far: 1. 2. Aggregate Social Security Budget Framework also considers progressivity—money’s worth Framework should also consider third dimension—uncertainty Review Aggregate Budget Implications for fairness across generations: when trust fund runs out, benefits will be cut to match current taxes (20-25%) Note that if we cut benefits now trust fund would not exhaust, benefits not cut! How can we measure outcomes across generations? Answer turns out to work within generations also, Measure of “money’s worth” we’ll use is ratio of lifetime benefits to lifetime taxes (PV ratio) INSERT PV RATIO FORMULA very low (1-10%) 146% low (11-35%) 120% middle (36-65%) 90% high (66-90% 81% very high (91-100% 63% So, as income rises, get less relative to what you put in What about across generations? o
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This note was uploaded on 04/28/2008 for the course ECON 401 taught by Professor Sabelhaus during the Spring '08 term at Maryland.

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Class Notes 042108 - Framework for Social Security Analysis So Far 1 Individual tax benefit rules 2 Aggregate Social Security Budget Framework

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