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

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

Abstract

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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  • Hines, James Jr. & Hlinko, John C. & Lubke, Theodore J. F., 1995. "From each according to his surplus: Equi-proportionate sharing of commodity tax burdens," Journal of Public Economics, Elsevier, vol. 58(3), pages 417-428, November.
  • Handle: RePEc:eee:pubeco:v:58:y:1995:i:3:p:417-428
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    References listed on IDEAS

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    Cited by:

    1. Fullerton, Don & Metcalf, Gilbert E., 2002. "Tax incidence," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 26, pages 1787-1872 Elsevier.
    2. repec:zbw:rwirep:0019 is not listed on IDEAS
    3. Plewka, Jörg, 2007. "Fiscal Discrimination Between Consumer Groups: Tax Burden Distribution Under Price Discrimination," Ruhr Economic Papers 19, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Tokarick, Stephen, 2006. "A simple rule for assessing tariff and tax incidence," Economics Letters, Elsevier, vol. 93(1), pages 116-120, October.
    5. repec:eee:mateco:v:70:y:2017:i:c:p:1-28 is not listed on IDEAS
    6. Jörg Plewka, 2007. "Fiscal Discrimination Between Consumer Groups: Tax Burden Distribution Under Price Discrimination," Ruhr Economic Papers 0019, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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