Effects of Varying Tax Receipts when Timing of Tax Payments is Indeterminate: The Case of a Tax on Corporate Distributions

Bradford, D.F. (1983). Effects of Varying Tax Receipts when Timing of Tax Payments is Indeterminate: The Case of a Tax on Corporate Distributions. IIASA Collaborative Paper. IIASA, Laxenburg, Austria: CP-83-053

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Abstract

This paper concerns an aspect of the question: When do government deficits matter? My original intent was to sketch out as a starting point the extension of previous work (1981) showing how endogenously generated deficits might have no real effect, a result obtained under an assumption of perfect substitutability between government and private debt, to a world of risky debt where the latter assumption would no longer hold. My intuition was that the extension would go through in a straightforward way. As it turns out, the extension is not quite as direct as I had expected, and I think the difference may be of some general interest. In particular, the conditions for neutrality seem less likely to be fulfilled in a practical context.

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