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It is actually a little bit more complex because there are special cases where there might be no tax burden shifting (see discussion in Mankiw Principles of Economics ch 12) although, generally speaking the statement of D. Friedman would be correct. As to why government does that, besides incompetence that should not be too casually dismissed, there might be ...


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Pay as you go vs Fully funded pension plan distinction is relevant here. Also known as Defined benefit vs Defined contribution. If everyone saved for their own pension via payroll taxes or otherwise (Pay as you go/ Defined contribution), then the ratio of retiring to contributing people indeed would not matter. However, most governments pay current ...


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