Costs of taxation and the benefits of public goods: the role of income effects

By: Contributor(s): Material type: TextTextSeries: Policy Research Working Paper, no. 3700Publication details: Washington, D.C. World Bank 2005Description: 30 pSubject(s): DDC classification:
  • 336.21
Summary: """The fact that raising taxes can increase taxed labor supply through income effects is frequently used to justify much lower measures of the marginal welfare cost of taxes and greater public good provision than indicated by traditional, compensated analyses. The authors confirm that this difference remains substantial with newer elasticity estimates, but show that either compensated or uncompensated measures of the marginal cost of funds can be used to evaluate the costs of taxation-and will provide the same result-as long as the income effects of both taxes and public good provision are incorporated in a consistent manner. ""--World Bank web site."
List(s) this item appears in: World Bank Working Paper Series
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Item type Current library Item location Shelving location Call number Status Date due Barcode
Books Vikram Sarabhai Library Rack 21-B / Slot 800 (0 Floor, East Wing) General Stacks 336.21 M2C6 (Browse shelf(Opens below)) Available 162370

Includes bibliographical references.

"""The fact that raising taxes can increase taxed labor supply through income effects is frequently used to justify much lower measures of the marginal welfare cost of taxes and greater public good provision than indicated by traditional, compensated analyses. The authors confirm that this difference remains substantial with newer elasticity estimates, but show that either compensated or uncompensated measures of the marginal cost of funds can be used to evaluate the costs of taxation-and will provide the same result-as long as the income effects of both taxes and public good provision are incorporated in a consistent manner. ""--World Bank web site."

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