Mardi | 2009-01-20

Alexis DIRER – Anne LAVIGNE

This paper studies how annuities should be taxed in a model à la Mir-rlees (1971) in presence of adverse selection and a positive link betweenincome and longevity. An annuity tax can address the adverse selectionproblem by subsidizing small annuities (purchased by low income groups)and taxing large annuities (purchased by high income groups). Numericalsimulations suggest that the degree of progressivity of taxation is signi…-cant and increases when annuitants get older.