Baseline U.S. Generational Accounts

Tables 1 and 2 present baseline U.S. generational accounts for males and females. The base year for this analysis is 1995, but the fiscal projections used in the accounts are those prevailing as of late Fall 1998. The tables show the remaining lifetime net tax payments of every fifth male and female cohort alive in 1995. The figures are based on a 6 percent real discount rate and a 1.2 percent rate of labor productivity growth. All government (local, state, and federal) taxes and transfer payments are included in the analysis. other

Consider 40-year-old males. Their remaining lifetime net tax payment is $171,200. This is much higher than the $77,400 in net taxes owed, in present value, by newborn males, because these newborn males are many years away from paying much in the way of taxes. On the other hand, it’s smaller than the $196,800 account of 30-year old males, who have almost all of their peak tax-paying years ahead of them and who are farther away, in time, from receiving significant transfers in the form of social security, Medicare, and Medicaid benefits. Compared to 40-year old males and, indeed, any males under age 55, males 60 and older are, on average, net recipients of the government’s largess. Seventy-year-old males, for example, can expect to receive an average of $89,200 from the government in benefits above and beyond what they can expect to pay in taxes.