The Opportunity Cost of Import Tariffs
Existing estimates of the welfare cost of import tariffs ignore the social cost of replacing the tariff revenue with another tax. As a practical matter, this is an important omission because the alternative tax might entail a substantial welfare cost. This paper examines the relative efficiency of import tariffs and existing domestic taxes. As a case study, comparisons are made between the welfare cost imposed by replacing the tariff revenue using the alternative domestic taxes in the United States. It is found that the alternative U.S. domestic taxes are probably less efficient than U.S. tariffs. Copyright 1987 by WWZ and Helbing & Lichtenhahn Verlag AG
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Volume (Year): 40 (1987)
Issue (Month): 1 ()
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