Abstract
The US government has spent decades taxing current generations while also writing them huge IOUs for future benefits. This paper models the effect on everyday Americans of closing the true $210 trillion fiscal gap with an immediate and permanent 57 percent increase in all federal taxes or with a delayed increase of 69 percent. We examine the impact either method of smoothly closing the fiscal gap would have on five stylized households in three different cohorts. Raising the federal tax rate on all households, at all age and resource levels, increases each family's lifetime tax rate and decreases lifetime spending. The results show that delaying the tax increase lowers the burden on those now alive, particularly the elderly. Meanwhile, the burden on those left to pick up the tab grows larger with each passing year of congressional and presidential inaction.
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