Accounting PhD

## The Lifetime Economic Value of Tax Planning for U.S. Public-Sector Employees

### Dissertation Overview

This dissertation investigates the long-term economic consequences of tax-planning decisions among U.S. public-sector employees.

Traditional tax research frequently examines taxation within a single year or evaluates individual tax provisions independently. However, many tax-planning decisions produce consequences extending across several decades. Contributions to traditional or Roth retirement accounts, pension distributions, retirement timing, Roth conversions, Social Security claiming, investment realization decisions, and outside business income may alter both current taxes and future taxable income.

This dissertation develops a lifecycle framework for measuring the cumulative economic value of tax planning.

Public-sector employees provide an especially useful population because workers commonly participate simultaneously in defined-benefit pension systems and tax-advantaged defined-contribution arrangements such as 403(b), 457(b), TSP, IRA, and related retirement accounts.

The research will compare alternative tax-planning strategies over complete careers and retirement periods while accounting for uncertainty in income, investment performance, longevity, tax rates, and retirement timing.

### Primary Research Question

To what extent can systematic lifecycle tax planning increase after-tax lifetime wealth and retirement security among U.S. public-sector employees?

### Secondary Research Questions

1. What is the lifetime economic value of coordinating pension benefits with traditional and Roth retirement accounts?

2. Under what conditions does traditional retirement saving dominate Roth saving, and under what conditions does Roth saving dominate traditional saving?

3. How does retirement-income timing affect lifetime federal and state taxation?

4. What is the value of Roth conversions during temporarily low-income years?

5. How does side-business or self-employment income affect optimal retirement-account and tax-planning strategies?

6. How do state income-tax differences alter optimal contribution and retirement-location strategies?

7. How large is the difference between annual tax minimization and lifetime tax optimization?

8. How robust are optimal tax-planning strategies to future changes in tax rates, investment returns, inflation, and longevity?

9. Which taxpayer characteristics create the greatest potential economic benefit from professional tax planning?

### Research Design

The dissertation will construct representative public-sector employee profiles across occupations, salary levels, ages, states, pension systems, household situations, and career stages.

For each worker profile, multiple tax strategies will be modeled, including:

baseline or minimal planning
traditional retirement contributions
Roth contributions
mixed Roth and traditional strategies
403(b) and 457(b) coordination
TSP strategies for federal employees
IRA contributions
Roth conversions
retirement-income sequencing
pension and Social Security coordination
side-business retirement planning

Federal and state tax liabilities will be calculated for each simulated year.

Commercial tax-preparation software may be used as an external validation mechanism for selected benchmark cases, while the research model itself will independently implement the relevant tax rules so that large-scale reproducible simulations can be conducted.

### Outcome Measures

The primary outcomes will include:

lifetime federal taxes
lifetime state taxes
present value of lifetime taxes
after-tax terminal wealth
after-tax retirement income
consumption during retirement
effective lifetime tax rate
marginal value of tax planning
probability of retirement-income shortfall
probability of asset depletion
inheritance or terminal estate value

Rather than identifying a strategy that performs best under one assumed future, the dissertation will evaluate strategies across thousands or millions of alternative economic and personal scenarios.

A strategy may therefore be evaluated according to both expected return and robustness.

### Expected Contribution

The dissertation will contribute to accounting and taxation research by shifting the unit of analysis from annual tax liability toward lifetime after-tax economic outcomes.

It will demonstrate that a strategy minimizing current-year taxes is not necessarily the strategy maximizing lifetime after-tax wealth.

The project will also quantify the economic value created by tax planning and identify the worker populations for whom tax planning has the greatest potential impact.

By incorporating statistical uncertainty models and economic behavioral responses developed in preceding research, the dissertation will connect accounting decisions to household financial behavior, public pension systems, and long-term retirement security.

The resulting framework could ultimately support occupation-specific and jurisdiction-specific retirement and tax-planning tools for teachers, firefighters, police officers, federal employees, state employees, municipal workers, and other public-sector employees.