Efficiency Taxes

Posted on Nov 21, 2007 by AndrewL

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"When payments to government incur no deadweight loss, these are efficient fees. They can take the form of a tax, but in substance, efficient payments are necessarily in exchange for a service or penalties for causing damage. The main categories of efficient taxes are user fees, charges based on land value or rent, and charges that compensate for social costs such as pollution and congestion. Just as wages which are high enough to prevent inefficient turnover are referred to in economics as "efficiency wages," payments to government, those which have no excess burden and so don't reduce economic productivity, are efficiency taxes."

URL: http://www.paactionnetwork.org/uploads/resources/1195690292.doc

Tags: Pennsylvania/PAactionnetwork.org

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