Intergenerationally Neutral Taxation
AbstractThe paper proposes a basic definition of intergenerational neutrality of fiscal policy in the life cycle model. The requirement of intergenerational neutrality imposes a restriction on the use of fiscal instruments that eliminates any welfare effects from intergenerational redistribution and thereby isolates the price effects of fiscal policy. This restriction endogenously determines a distribution of tax revenues in the form of transfers to young and old agents which ensures intergenerational neutrality. The endogenously determined share of tax revenues rebated to young and old agents is interpreted as the intergenerational incidence of the tax system. If revenues are not refunded to agents according to the intergenerational incidence of taxes, then redistribution in one or the other direction is installed. Hence, the derivation of intergenerationally neutral tax effects provides a benchmark for evaluating the redistributive content of an arbitrary fiscal program.
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Bibliographic InfoPaper provided by University of Bonn, Germany in its series Discussion Paper Serie A with number 305.
Date of creation: Apr 1991
Date of revision:
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Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
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Intergenerational tax incidence; intergenerational redistribution; intergenerationally neutral taxation;
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- Keuschnigg, Christian & Keuschnigg, Mirela & Koman, Reinhard, 2000. "Public Debt and Generational Balance in Austria Lueth, Erik; Raffelhueschen, Bernd," Economics Series 80, Institute for Advanced Studies.
- Christian Keuschnigg & Mirela Keuschnigg & Reinhard Koman & Erik LÃ¼th & Bernd RaffelÃ¼schen, 2000. "Public Debt and Generational Balance in Austria," Empirica, Springer, vol. 27(3), pages 225-252, September.
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