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Minneapolis Fed Vice President Preston Miller suggests that long-term federal budget problems, exacerbated by the needs of an aging population, might be alleviated by a new approach to funding benefits received by that same aging population.
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This paper examines the effects of government spending under both lump-sum and income tax regimes. Under a lump-sum tax financing scheme, an increase in government spending induces a rise in the real interest rate and causes labor effort and real output to increase because of the income effect....
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of taxation and expenditure policies. ; Becsi shows that many tax schemes in their macro-economic effects are essentially … a reduction in defense expenditures. He shows that use of the dividend to reduce capital taxes causes consumption to … directions, but whether output rises or falls is uncertain. Using the peace dividend to increase public investment will also …
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Oshkosh Scholar, Volume 2, 2007, p. 19-27.
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