If the government levies a one-time temporary tax on the young and gives the proceeds to the elderly, and both generations follow the life-cycle consumption pattern and are altruistically linked:

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Given the life-cycle consumption pattern and altruistic links between generations, a one-time temporary tax on the young with proceeds given to the elderly would lead to internal transfers within families. The young would reduce their consumption or savings to pay the tax, while the elderly would increase their consumption by the amount received. However, due to the altruistic links, the elderly might transfer back some or all of the proceeds to their young, aiming to smooth consumption across generations. Thus, the net effect on overall consumption would be neutral, as any decrease in consumption by the young would be offset by an increase in consumption by the elderly.

If the Government Levies a One-Time Temporary Tax on the Young