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From each according to his surplus: Equi-proportionate sharing of commodity tax burdens

  • Hines, James Jr.
  • Hlinko, John C.
  • Lubke, Theodore J. F.

This paper examines the incidence of commodity taxes, finding that, when demand and marginal cost schedules are linear. the burden of commodity taxation is distributed between buyers and sellers so that each suffers the same percentage reduction on pre-tax surplus. This equiproportionate reduction in surplus is the outcome of commodity taxes set at any rate, and is unaffected by relative demand and supply elasticities. Hence, when demand and marginal cost schedules are linear, commodity taxes resemble flat-rate taxes imposed on market surplus. Similar results apply to nonlinear schedules with certain ranges.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 58 (1995)
Issue (Month): 3 (November)
Pages: 417-428

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Handle: RePEc:eee:pubeco:v:58:y:1995:i:3:p:417-428
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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  1. Homma, Masaaki, 1977. "A comparative static analysis of tax incidence," Journal of Public Economics, Elsevier, vol. 8(1), pages 53-65, August.
  2. Skeath, Susan E. & Trandel, Gregory A., 1994. "A Pareto comparison of ad valorem and unit taxes in noncompetitive environments," Journal of Public Economics, Elsevier, vol. 53(1), pages 53-71, January.
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  8. Barzel, Yoram, 1976. "An Alternative Approach to the Analysis of Taxation," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1177-97, December.
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  10. Alan J. Auerbach, 1982. "The Theory of Excess Burden and Optimal Taxation," NBER Working Papers 1025, National Bureau of Economic Research, Inc.
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  12. Kotlikoff, Laurence J. & Summers, Lawrence H., 1987. "Tax incidence," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 16, pages 1043-1092 Elsevier.
  13. Feldstein, Martin S, 1977. "The Surprising Incidence of a Tax on Pure Rent: A New Answer to an Old Question," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 349-60, April.
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  16. Hausman, Jerry A, 1981. "Exact Consumer's Surplus and Deadweight Loss," American Economic Review, American Economic Association, vol. 71(4), pages 662-76, September.
  17. Willig, Robert D, 1976. "Consumer's Surplus without Apology," American Economic Review, American Economic Association, vol. 66(4), pages 589-97, September.
  18. Willig, Robert D, 1979. "Consumer's Surplus without Apology: Reply," American Economic Review, American Economic Association, vol. 69(3), pages 469-74, June.
  19. Fane, George, 1984. "The Incidence of a Tax on Pure Rent: The Old Reason for the Old Answer," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 329-33, April.
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