Taxation and Saving.

• Position: Conferences

An NBER Conference on Taxation and Saving, organized by James M. Poterba of NBER and MIT, took place on August 1 and 2. The following papers were discussed:

Andrew A. Samwick, NBER and Dartmouth College, "Mutual Fund Choice in 529 Plans: Federal Tax Advantages and Local Monopolies"

Discussant: Len Burman, Urban Institute

Susan Dynarski, NBER and Harvard University, "Who Benefits from the Education Saving Incentives? Income, Educational Expectations, and the Value of the 529 and Coverdell"

Discussant: Jeffrey Brown, NBER and University of Illinois

Gary Engelhardt, Syracuse University, and Brigitte Madrian, NBER and University of Chicago, "Tax-Deferred Saving and Participation in Employee Stock Purchase Plans"

Discussant: Roger H. Gordon, NBER and University of California, San Diego

Austan Goolsbee, NBER and University of Chicago, "How Do Tax Rates Affect Executives' Decisions About Corporate Stock?"

Discussant: William M. Gentry, NBER and Columbia University

Wojciech Kopczuk, NBER and Columbia University, and Emmanuel Saez, NBER and University of California, Berkeley, "Top Wealth Shares in the United States, 1916-2000: Evidence from Estate Tax Returns"

Discussant: Scott Weisbenner, NBER and University of Illinois

David Joulfaian, U.S. Department of the Treasury, and Kathleen M. McGarry, NBER and University of California, Los Angeles, "Estate and Gift Tax Incentives and Inter Vivos Giving"

Discussant: Alan J. Auerbach, NBER and University of California, Berkeley

Daniel R. Feenberg, NBER, and James M. Poterba, "The Alternative Minimum Tax and Effective Marginal Tax Rates"

Discussant: Rosanne Altshuler, Rutgers University

Jagadeesh Gokhale, Federal Reserve Bank of Cleveland, and Laurence J. Kotlikoff, NBER and Boston University, "The Impact on Consumption and Saving of Current and Future Fiscal Policies"

Discussant: Jonathan S. Skinner, NBER and Dartmouth College

James M. Poterba, "Valuing Assets in Retirement Saving Accounts"

Discussant: William Gale, Brookings Institution

The passage of tax reform legislation in 2001 opened up new tax-advantaged opportunities for families to save for college educations through 529 plans. Unlike other tax-advantaged savings accounts, 529 plans must be chartered by states. Several factors, including more favorable state income tax treatment of contributions or withdrawals, suggest the possibility of a "home bias" in which residents of a state tend to invest disproportionately in their own state's plan. Home bias confers a local monopoly rent on the mutual fund family that manages the 529 plans. Samwick analyzes the extent to which that rent appears in the fee structure and performance characteristics of mutual funds that are made available in 529 plans. While examples can be found of poor offerings in 529 plans, the general result is that mutual fund companies do not systematically offer...