Political economy of taxation in an overlapping-generations economy |
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Institution: | 1. Economic Research, Federal Reserve Bank of Chicago, 230 S. LaSalle Street, Chicago, IL, USA;2. NBER, USA |
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Abstract: | This paper analyzes the effects of intergenerational conflict on capital and labor income tax rates, transfers, and government spending in a model of multidimensional policy choice. The different nature of tax liabilities for the young and the old can explain why the old receive large gross lump-sum transfers through social security, while the young receive little or none. A natural link also emerges between the size of the government as a provider of public goods and the magnitude of transfers that the same government will implement. |
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