Template-Type: ReDIF-Paper 1.0
Title: Intergenerationally Neutral Taxation
Author-Name: Christian Keuschnigg
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Keywords: Intergenerational tax incidence, intergenerational redistribution, intergenerationally neutral taxation
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.
Series: Sonderforschungsbereich 303, University of Bonn, Germany

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Creation-Date: 1991-04
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Handle: RePEc:bon:bonsfa:305