Costs of Taxation and Benefits of Public Goods with Multiple Taxes and Goods

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dc.creatorAnderson, James E.
dc.creatorMartin, Will
dc.date2012-03-19T18:41:44Z
dc.date2012-03-19T18:41:44Z
dc.date2010-09-01
dc.date.accessioned2026-07-01T01:16:03Z
dc.descriptionThe recent public economics literature involves an apparent consensus that income effects reduce the costs of raising revenues and hence increase the desirable level of public good provision. Higher taxes can indeed reduce the demand for leisure -- and hence increase the supply of taxed labor -- through income effects. However, the consensus is wrong because the income effects of taxes must be considered symmetrically with those from provision of public goods. This paper uses a model with multiple public goods and taxes to derive consistent measures of the marginal benefits of publicly-provided goods and their marginal social costs. With this model, the authors show that either compensated approaches excluding these income effects or uncompensated approaches including them may be used. If an uncompensated measure of the marginal cost of funds is used, however, the benefits of providing public goods should be adjusted with a simple, benefit multiplier not previously seen in the literature. Once this is done, the optimal level of public provision is independent of whether compensated or uncompensated approaches are used. Proper accounting for these income effects -- or their omission using a compensated approach -- appears to substantially raise the hurdle for government provision where there are substantial taxes bearing on labor.
dc.formatapplication/pdf
dc.formattext/plain
dc.identifierhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100901082448
dc.identifierhttps://hdl.handle.net/10986/3895
dc.identifier10.1596/1813-9450-5410
dc.identifier.urihttp://hdl.handle.net/123456789/416567
dc.languageEnglish
dc.relationPolicy Research working paper ; no. WPS 5410
dc.rightsCC BY 3.0 IGO
dc.rightshttp://creativecommons.org/licenses/by/3.0/igo/
dc.rightsWorld Bank
dc.subjectACCOUNTING
dc.subjectAGRICULTURE
dc.subjectBENCHMARK
dc.subjectBUDGET CONSTRAINT
dc.subjectBUDGET CONSTRAINTS
dc.subjectCOMMODITIES
dc.subjectCOMMODITY
dc.subjectCOMPETITIVE MARKET
dc.subjectCONSUMER DEMAND
dc.subjectCONSUMER DEMANDS
dc.subjectCONSUMERS
dc.subjectCOST OF FUNDS
dc.subjectDECISION MAKING
dc.subjectDERIVATIVE
dc.subjectDERIVATIVES
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPMENT ECONOMICS
dc.subjectDIFFERENTIAL TAXATION
dc.subjectDISPOSABLE INCOMES
dc.subjectECONOMIC EFFICIENCY
dc.subjectECONOMIC PERFORMANCE
dc.subjectECONOMIC RESEARCH
dc.subjectECONOMIC THEORY
dc.subjectECONOMICS
dc.subjectECONOMICS LITERATURE
dc.subjectELASTICITY
dc.subjectEQUALIZATION
dc.subjectEQUATIONS
dc.subjectEXCISE TAXES
dc.subjectEXCLUSION
dc.subjectFISCAL BALANCE
dc.subjectFISCAL POLICIES
dc.subjectFISCAL POLICY
dc.subjectGDP
dc.subjectGOVERNMENT BUDGET
dc.subjectGOVERNMENT DEFICIT
dc.subjectGOVERNMENT EXPENDITURE
dc.subjectGOVERNMENT EXPENDITURES
dc.subjectGOVERNMENT POLICY
dc.subjectGOVERNMENT REVENUE
dc.subjectGOVERNMENT REVENUES
dc.subjectGOVERNMENT SPENDING
dc.subjectGROSS DOMESTIC PRODUCT
dc.subjectHOLDING
dc.subjectINCOME
dc.subjectINCOME EFFECT
dc.subjectINCOME TAX
dc.subjectINCOME TAXES
dc.subjectINEFFICIENCY
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL TRADE
dc.subjectMARGINAL BENEFITS
dc.subjectMARGINAL COST
dc.subjectMARGINAL COSTS
dc.subjectMARGINAL PRODUCTIVITY
dc.subjectMARGINAL TAX RATES
dc.subjectMARGINAL VALUE
dc.subjectMARKET ENVIRONMENT
dc.subjectMARKET PRICES
dc.subjectMATHEMATICAL LOGIC
dc.subjectNATIONAL BUDGET
dc.subjectNATIONAL INCOME
dc.subjectNORMAL GOOD
dc.subjectOPEN ECONOMY
dc.subjectOPTIMAL TAXATION
dc.subjectOUTPUT
dc.subjectOUTPUTS
dc.subjectPOLITICAL ECONOMY
dc.subjectPRICE CHANGES
dc.subjectPRIVATE GOODS
dc.subjectPRIVATE SECTOR
dc.subjectPRODUCTION EFFICIENCY
dc.subjectPRODUCTION STRUCTURE
dc.subjectPROGRESSIVE TAXATION
dc.subjectPROGRESSIVE TAXES
dc.subjectPUBLIC
dc.subjectPUBLIC ECONOMICS
dc.subjectPUBLIC EXPENDITURE
dc.subjectPUBLIC FINANCE
dc.subjectPUBLIC FUNDS
dc.subjectPUBLIC GOOD
dc.subjectPUBLIC GOODS
dc.subjectPUBLIC POLICY
dc.subjectPUBLIC SECTOR
dc.subjectPUBLIC SPENDING
dc.subjectRATE OF RETURN
dc.subjectREAL INCOME
dc.subjectRETURNS
dc.subjectROADS
dc.subjectSHADOW PRICES
dc.subjectSINGLE TAX
dc.subjectSMALL ECONOMY
dc.subjectSOCIAL COST
dc.subjectSOCIAL COSTS
dc.subjectSOCIAL MARGINAL COST
dc.subjectTAX
dc.subjectTAX AVOIDANCE
dc.subjectTAX BASE
dc.subjectTAX BASES
dc.subjectTAX CHANGES
dc.subjectTAX MEASURES
dc.subjectTAX POLICY
dc.subjectTAX RATE
dc.subjectTAX RATES
dc.subjectTAX REFORM
dc.subjectTAX REFORMS
dc.subjectTAX REVENUE
dc.subjectTAX REVENUES
dc.subjectTAXABLE INCOME
dc.subjectTAXATION
dc.subjectTAXPAYERS
dc.subjectUSER CHARGES
dc.subjectVALUATION
dc.subjectVALUATIONS
dc.subjectWELFARE ECONOMICS
dc.titleCosts of Taxation and Benefits of Public Goods with Multiple Taxes and Goods

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