The Effect of the Current IRA Program on Federal Debt  

Oleh:

Caliendo, Frank ; Lewis, W. Cris

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Public Finance Review vol. 32 no. 3 (Mei 2004), page 331-351.
Topik: traditional IRA; Roth IRA; government revenue
Fulltext: 331PFR323.pdf (117.51KB)

Isi artikel

This article analyzes the long-term impact of the current individual retirement account (IRA) program on government debt. The initial work on this subject was conducted by Feldstein (1995), who argued that the traditional IRA has a favorable long-term effect on government debt. Yet, absent from the literature is any formal extension of Feldstein’s model to include the Roth IRA. Using modeling techniques similar to Feldstein, the Roth IRA is shown to have a negative long-term effect on government debt. The model includes personal and corporate tax revenue collections, the cost of government debt, the source of Roth IRA saving, the payment source of the taxes paid on Roth contributions, and optimal investment strategies.Aconceptual, newtype of IRA is proposed as a replacement for the Roth IRA.

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