We calculate increases in contributions required to achieve full
funding of state and local pension systems in the United States
over 30 years. Without policy changes, contributions would have to
increase by 2.5 times, reaching 14.1 percent of the total own revenue
generated by state and local governments. This represents a tax
increase of $1,385 per household per year, around half of which
would go to pay down legacy liabilities while half would fund the cost
of new promises. We examine sensitivity to asset return assumptions,
wage correlations, the treatment of workers not currently in Social
Security, and endogenous geographical shifts in the tax base.
Novy-Marx, Robert, and Joshua Rauh.
"The Revenue Demands of Public Employee Pension Promises."
American Economic Journal: Economic Policy,
Social Security and Public Pensions
State and Local Government: Health; Education; Welfare; Public Pensions
Retirement; Retirement Policies
Public Sector Labor Markets