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Tax Smoothing versus Tax Shifting

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  • Niepelt, Dirk

    ()
    (Institute for International Economic Studies, Stockholm University)

Abstract

Household-specific growth rates of the tax base imply that the timing of tax collections determines the distribution of tax burdens and wealth across households. Changes in financial policy do not only shift taxes across generations, but also within cohorts. Institutional deficit constraints settle tax shifting conflicts in favor of individuals with high income growth. With distortionary taxes, policy makers trade off the wealth effects of financial policy and the efficiency cost of household-specific deadweight burdens. I apply the incidence analysis of financial policy to two examples: The financing of the German unification, and the timing of tax collections over the U.S. business cycle.

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Bibliographic Info

Paper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 711.

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Length: 30 pages
Date of creation: 16 May 2002
Date of revision:
Publication status: Published in Review of Economic Dynamics, 2004, pages 27-51.
Handle: RePEc:hhs:iiessp:0711

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Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden
Phone: +46-8-162000
Fax: +46-8-161443
Web page: http://www.iies.su.se/
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Keywords: Optimal Financial Policy; government debt; income distribution; time consistency;

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  13. Niepelt, Dirk, 2002. "Tax Smoothing versus Tax Shifting," Seminar Papers 711, Stockholm University, Institute for International Economic Studies.
  14. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
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Citations

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Cited by:
  1. Dirk Niepelt, 2005. "Starving the Beast? Intra-Generational Conflict and Balanced Budget Rules," Working Papers 05.04, Swiss National Bank, Study Center Gerzensee.
  2. Katharina Greulich & Albert Marcet, 2008. "Pareto-Improving Optimal Capital and Labor Taxes," Working Papers 337, Barcelona Graduate School of Economics.
  3. Niepelt, Dirk, 2002. "Tax Smoothing versus Tax Shifting," Seminar Papers 711, Stockholm University, Institute for International Economic Studies.
  4. Ananda Jayawickrama & Tilak Abeysinghe, 2013. "The experience of some OECD economies on tax smoothing," Applied Economics, Taylor & Francis Journals, vol. 45(16), pages 2305-2313, June.
  5. Railavo , Jukka, 2004. "Stability consequences of fiscal policy rules," Research Discussion Papers 1/2004, Bank of Finland.
  6. Facundo Piguillem & Anderson L. Schneider, 2010. "Heterogeneous Labor Skills, The Median Voter and Labor Taxes," EIEF Working Papers Series 1002, Einaudi Institute for Economics and Finance (EIEF), revised Nov 2009.
  7. Jukka Railavo, 2004. "Stability consequences of fiscal policy rules," Macroeconomics 0404020, EconWPA.

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