The Outbreak of a Tax Break: Essays on the Participation and Impact of the Saver's Credit Across Time and Distance



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Shortly after the introduction of the Saver’s Credit in 2002, the research world was quick to explore its impacts, all imposing the inherent assumption that taxpayers’ awareness, and subsequent utilization, would be relatively swift and void of any spatial dimension. However, an ever-growing body of work challenges these assumptions finding that communities play a significant role in the dissemination of and response to information. Now that nearly two decades have passed, I expose the locational heterogeneity, spatial dynamics, and long run impact of the Saver’s Credit. Through thematic mapping, spatial autocorrelation, and spatial regression modeling using the population of tax returns from 1999 to 2013, I uncover the influence that neighborhood characteristics have on participation. I find participation is not just spatially autocorrelated but strongly associated with the concentration of married households and the use of a paid preparer. I then measure the impact of the credit on retirement contributions through a Regression Discontinuity model to show that overall contributions have improved, between 12 to 24 percent per person per year, a result that is relatively sensitive to economic cycles.