Benefit-Cost and Incidence Study of Transfers, Financed by Taxes on Profits, in a Growing Neoclassical Economy with Two Labor Inputs,
Abstract
The first important contribution of this analysis is the development of appropriate concepts permitting meaningful discussion of the trnsfer problem. In doing so, the relationship of tax and transfer incidence analysis to the theory of benefit-cost analysis is revealed. Thus, cost benefit analysts may find the tax and transfer incidence analysis of interest in their approach. Second, an analytical solution is offered for the rather overly specific case of an economy with Cobb-Douglas production functions and a Cobb-Douglas aggregation index. Third, in a particular set of parameters applied to this analytical solution, a successful transfer policy is possible but may result in high social costs. A trade-off between the realized transfer and the global tax burden has to be considered. For a given social welfare function there exists an optimal tax rate, above which transfer policy will result in a lower social welfare level. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 1971
- Accession Number
- AD0731085
Entities
People
- Henry Fox Sr
- Marian Krzyzaniak
Organizations
- Rice University