Intergenerationally Neutral Taxation
Journal
Public Finance/Finances Publiques
Type
journal article
Date Issued
1992
Author(s)
Abstract
The 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.
Language
English
Keywords
Intergenerational tax incidence
intergenerational redistribution
intergenerationally neutral taxation.
HSG Classification
not classified
Refereed
No
Volume
47
Number
3
Start page
446
End page
461
Pages
16
Subject(s)
Eprints ID
21983