Neutral Taxation of Pensions in a Comprehensive Income Tax

We derive an ex post neutral comprehensive income tax on pension schemes equivalent to a Johansson--Samuelson tax that guarantees nondiscriminatory treatment of lifetime-dependent and other investments. By separately taxing contributions and benefits, our concept does not require any assumptions on the return of a pension scheme and therefore is of special interest for taxing public PAYGO schemes. Assuming constant tax and interest rates, the system is characterized by constant fractions of deductible contributions and taxable pensions. The tax base from neutral pension taxation considerably exceeds the one under existing legislation, e.g.in Germany or in the U. S.