Is there justification for shifting some of the cost of capital projects to future taxpayers through issuing debt?
A) Yes, future taxes should be increased.
B) No, future taxes should be decreased.
C) Yes, because they will benefit from these investments.
D) No, because they will not benefit from these investments.
E) No. Capital projects should never be financed by issuing debt.

Question

Quizplus · Accepted Answer

Capital projects such as infrastructure investments can provide benefits to future taxpayers, such as improved transportation, utilities, or public facilities. If the benefits of the project are spread over many years, it may be reasonable to finance the initial costs with debt that is repaid over time. This spreads the cost of the investment across multiple generations that will benefit from it, and can enable governments to undertake projects that might not be feasible if they had to be fully funded upfront.

Is There Justification for Shifting Some of the Cost of Capital