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Tax Smoothing versus Tax Shifting

  • Niepelt, Dirk

    ()

    (Institute for International Economic Studies, Stockholm University)

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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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
Contact details of provider: 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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