Will the Real Excess Burden Please Stand Up? (Or, Seven Measures in Search of a Concept)
It is well understood that a tax which distorts relative prices generates a welfare cost or "excess burden" in addition to any associated transfer of resources, but there remains considerable controversy and confusion with respect to procedures for measuring this excess burden. The purpose of this paper is to clarify matters concerning what is one of the most basic concepts in welfare economics. We describe and evaluate a number of alternative conceptual experiments which might lie behind an excess burden calculation, showing how these notions can be represented graphically and algebraically and how they can be approximated numerically.
|Date of creation:||Jun 1980|
|Date of revision:|
|Publication status:||published as The Fiscal Behavior of State and Local Governments, Rosen, H., ed., Edward Elgar Publishing, 1997, pp. 301-322.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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in: Research in Taxation, pages 121-135
National Bureau of Economic Research, Inc.
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NBER Working Papers
0319, National Bureau of Economic Research, Inc.
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