TY  - JOUR
AU  - Rangel,Antonio
TI  - How to Protect Future Generations Using Tax Base Restrictions
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9179
PY  - 2002
Y2  - September 2002
UR  - http://www.nber.org/papers/w9179
L1  - http://www.nber.org/papers/w9179.pdf
N1  - Author contact info:
Antonio Rangel
Department of Economics
California Institute of Technology
HSS MC 228-77
Pasadena, CA 91125
Tel: (626) 395-4091
E-Mail: rangel@hss.caltech.edu
AB  - This paper studies constitutional restrictions on the tax base that protect future generations from expropriation and improve the optimality of investment in Intergenerational Public Goods (IPGs). The choice of the tax base matters because it affects how intergenerational (IG) spillovers are capitalized into assets that are owned by current generations, and thus the IG politics. We show that with an income tax base, present generations expropriate future generations and produce inefficiently low levels of IPGs. By contrast, with a land tax base, IG expropriation using debt is impossible, the level of investment in IPGs is higher and, for some types of IPGs, Pareto optimal.
ER  -