Risk sharing across generations without publicly owned equities

The U.S. Social Security trust fund currently invests in government bonds. Investing some of it instead in equities while continuing to pay Social Security benefits under existing rules would alter—potentially improve—the sharing of financial risks across non-trading generations. This paper shows that the same risk sharing can be achieved without direct government ownership of equities if instead the government places a linear and symmetric tax on risky private capital returns. This equivalence is very robust and holds even if some agents are endogenously borrowing constrained.