Research Papers on www.economicmemos.com
Subtitle: The AGI Conflict: Balancing Today’s Liquidity Against Tomorrow’s Tax Traps
Two recent research papers focusing on distortions to work and financial incentives associated with AGI-linked programs—specifically the ACA premium tax credit and the RAP student loan program—are now available for paid subscribers.
The First Paper: Liquidity Today, Tax Traps Tomorrow This paper examines how AGI-linked subsidies and loan repayments incentivize workers to maximize pre-tax savings to boost current cash flow. However, this “liquidity first” strategy often creates a retirement trap, leaving households with fully taxable portfolios that trigger higher Social Security taxes and Medicare surcharges as they age. The research suggests a balanced approach: building Roth assets and eliminating debt to preserve long-term flexibility.
The Second Paper: Marriage Penalties and Implicit Tax Rates The second paper demonstrates how these same AGI-linked programs create a significant marriage penalty and high implicit (de-facto) marginal tax rates for married couples during their working years.
Author’s Note: Remember to visit Weekend Update, which I sometimes publish midweek.
Shorter posts on this blog have described these results previously. Both full-length research papers are available for paid subscribers only below.
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