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Intergenerational Fiscal Constitutions: How to Protect Future Generations Using Land Taxes and Federalism

  • John Conley

    ()

    (University of Illiniois)

  • Antonio Rangel

    ()

    (Standford Univerisity and NBER)

This paper studies how to design a fiscal constitution that protects future generations from expropriation and generates optimal investment in intergenerational public goods. We study how to accomplish these goals by changing the level of government to which different types of intergenerational public goods are assigned, and the tax base of the different jurisdictions. We show that land taxation is the essential instrument for policies that mostly generate fiscal spillovers, such as debt and public infrastructure. By contrast, interjurisdictional competition is required for policies that mostly generate direct spillovers, such as irreversible environmental damages. Furthermore, we show that it is possible to design a fiscal constitution that generates full capitalization of fiscal spillovers, but in general, not one that generates full capitalization of direct spillovers.

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File URL: http://www.accessecon.com/pubs/EB/2001/Volume28/EB-01AA0021A.pdf
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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 28 (2001)
Issue (Month): 17 ()
Pages: A0

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Handle: RePEc:ebl:ecbull:eb-01aa0021
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  1. Joseph G. Altonji & Fumio Hayashi & Laurence Kotlikoff, 1995. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," NBER Working Papers 5378, National Bureau of Economic Research, Inc.
  2. Dennis Epple & Katherine Schipper, 1981. "Municipal pension funding: A theory and some evidence," Public Choice, Springer, vol. 37(1), pages 141-178, January.
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