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Should the Government's Allocation Branch be Concerned about the Distortionary Cost of Taxation and Distributive Effects?

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  • Louis Kaplow

Abstract

Does taxation for public goods generally involve a distortionary cost? Are Pigouvian taxes desirable because they raise revenue without having to resort to distortionary taxes? Should decisions concerning public goods or Pigouvian taxes depend on whether their incidence is regressive? The answer to these questions may be negative, contrary to conventional wisdom, if one considers a different and arguably more natural method of achieving budget balance than is typically assumed.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4566.

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Date of creation: Dec 1993
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Publication status: published as The Optimal Supply of Public Goods and the Distortionary Cost of Taxation, National Tax Journal, Vol.49, No.4, pp.513-533(1996).
Handle: RePEc:nbr:nberwo:4566

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