Excess Burden: an ill defined concept?

Excess Burden: An Ill Defined Concept? ABSTRACT: The number and differences among alternative definitions of excess burden proposed in the literature, from seminal contributions by Marshall and Barone to the latest survey in the Handbook of Public Economics, stimulated the present paper where some of them are critically reviewed together with their ambiguities. Since its birth two notions of excess burden are available: an absolute notion (the excess burden of a single tax) and a relative one (the excess burden of a tax versus another): though distinct their differences blurred during years. The central thesis of this paper is that for excess burden to be a fruitful tool of analysis it should be interpreted as an intrinsically relative concept and the only way to avoid ambiguities in its interpretation is to define it in terms of either larger welfare loss of two equal yield taxes or tax structures or smaller revenue at a common final utility level.