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Lawrence H. Goulder - One of the best experts on this subject based on the ideXlab platform.
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Status effects, public goods provision, and Excess Burden
Journal of Public Economics, 2008Co-Authors: Ronald Wendner, Lawrence H. GoulderAbstract:Most studies of the optimal provision of public goods or the Excess Burden from taxation assume that individual utility is independent of other individuals' consumption. This paper investigates public good provision and Excess Burden in a model that allows for interdependence in consumption in the form of status (relative consumption) effects. In the presence of such effects, consumption and labor taxes no longer are pure distortionary taxes but have a corrective tax element that addresses an externality from consumption. As a result, the marginal Excess Burden of consumption taxes is lower than in the absence of status effects, and will be negative if the consumption tax rate is below the "Pigouvian" rate. Correspondingly, when consumption or labor tax rates are below the Pigouvian rate, the second-best level of public goods provision is above the first-best level, contrary to findings from models without status effects. For plausible functional forms and parameters relating to status effects, the marginal Excess Burden from existing U.S. labor taxes is substantially lower than in most prior studies, and is negative in some cases.
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Status Effects, Public Goods Provision, and the Excess Burden
SSRN Electronic Journal, 2008Co-Authors: Ronald Wendner, Lawrence H. GoulderAbstract:Most studies of the optimal provision of public goods or the Excess Burden from taxation assume that individual utility is independent of other individuals' consumption. This paper investigates public good provision and Excess Burden in a model that allows for interdependence in consumption in the form of status (relative consumption) effects. In the presence of such effects, consumption and labor taxes no longer are pure distortionary taxes but have a corrective tax element that addresses an externality from consumption. As a result, the marginal Excess Burden of consumption taxes is lower than in the absence of status effects, and will be negative if the consumption tax rate is below the "Pigouvian" rate. Correspondingly, when consumption or labor tax rates are below the Pigouvian rate, the second-best level of public goods provision is above the first-best level, contrary to findings from models without status effects. For plausible functional forms and parameters relating to status effects, the marginal Excess Burden from existing U.S. labor taxes is substantially lower than in most prior studies, and is negative in some cases.
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The Substantial Bias from Ignoring General Equilibrium Effects in Estimating Excess Burden, and a Practical Solution
Journal of Political Economy, 2003Co-Authors: Lawrence H. Goulder, Roberton C. WilliamsAbstract:We show that under typical conditions the simple “Excess‐Burden triangle” formula substantially underestimates the Excess Burden of commodity taxes, in some cases by a factor of 10 or more. This formula performs poorly because it ignores general equilibrium interactions—most important, interactions between the taxed commodity and the labor market. Many prior studies have shown that general equilibrium interactions affect Excess Burden but have not appreciated the bias associated with ignoring these interactions or the quantitative importance of this bias. We derive an implementable alternative to the simple formula. This alternative formula captures interactions that the simple formula omits; as a result it is both unbiased and usually more accurate.
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The Usual Excess-Burden Approximation Usually Doesn't Come Close
SSRN Electronic Journal, 1999Co-Authors: Lawrence H. Goulder, Roberton C. WilliamsAbstract:This paper shows that the usual Excess-Burden triangle' formula performs poorly when used to assess the Excess Burden from taxes on intermediate inputs or consumer goods, and derives a practical alternative to this formula. We use an analytically tractable general equilibrium model to reveal how interactions with pre-existing taxes in other markets critically affect the Excess Burden of new taxes on intermediate inputs or consumer goods. The usual Excess-Burden formula ignores these interactions, and consequently yields highly inaccurate assessments of Excess Burden. Prior economic theory implicitly acknowledges the relevance of general-equilibrium interactions to Excess Burden, but does not indicate which interactions are most important or reveal the fundamental (first-order) contribution of these interactions. Moreover, prior studies do not offer a practical alternative to the usual Excess-Burden approximation. This paper helps fill the gap between theory and practice. First, it shows analytically that the importance of the interaction with a given pre-existing tax is roughly proportional to the amount of revenue raised by that tax. Second, the paper derives a practical alternative formula for approximating the Excess Burden from a commodity tax. Finally, it performs numerical simulations to illustrate the significance of adopting our alternative to the usual approximation formula. For realistic parameter values and a wide range of assumed rates for prior taxes, the usual formula captures less than half of the Excess Burden of taxes on commodities. When the rate of the new tax is small,' this formula captures less than five percent of the true Excess Burden. In contrast, the alternative approximation formula derived here yields estimates that are consistently within five percent of the actual Excess Burden.
Robert M. Schwab - One of the best experts on this subject based on the ideXlab platform.
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The Window Tax: A Case Study in Excess Burden †
Journal of Economic Perspectives, 2015Co-Authors: Wallace E. Oates, Robert M. SchwabAbstract:The window tax provides a dramatic and transparent historical example of the potential distorting effects of taxation. Imposed in England in 1696, the tax—a kind of predecessor of the modern property tax—was levied on dwellings with the tax liability based on the number of windows. The tax led to efforts to reduce tax bills through such measures as the boarding up of windows and the construction of houses with very few windows. In spite of the pernicious health and aesthetic effects and despite widespread protests, the tax persisted for over a century and a half: it was finally repealed in 1851. Our purpose in this paper is threefold. First, we provide a brief history of the tax with a discussion of its rationale, its role in the British fiscal system, and its economic and political ramifications. Second, we have assembled a dataset from microfilms of local tax records during this period that indicate the numbers of windows in individual dwellings. Drawing on these data, we are able to test some basic hypotheses concerning the effect of the tax on the number of windows and to calculate an admittedly rough measure of the Excess Burden associated with the window tax. Third, we have in mind a pedagogical objective. The concept of Excess Burden (or "deadweight loss") is for economists part of the meat and potatoes of tax analysis. But to the laity the notion is actually rather arcane; public-finance economists often have some difficulty, for example, in explaining to taxpayers the welfare costs of tax-induced distortions in resource allocation. The window tax is a textbook example of how a tax can have serious adverse side effects on social welfare. In addition to its objectionable consequences for tax equity, the window tax resulted in obvious and costly misallocations of resources.
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the window tax a case study in Excess Burden
Journal of Economic Perspectives, 2015Co-Authors: Wallace E. Oates, Robert M. SchwabAbstract:The window tax provides a dramatic and transparent historical example of the potential distorting effects of taxation. Imposed in England in 1696, the tax—a kind of predecessor of the modern property tax—was levied on dwellings with the tax liability based on the number of windows. The tax led to efforts to reduce tax bills through such measures as the boarding up of windows and the construction of houses with very few windows. In spite of the pernicious health and aesthetic effects and despite widespread protests, the tax persisted for over a century and a half: it was finally repealed in 1851. Our purpose in this paper is threefold. First, we provide a brief history of the tax with a discussion of its rationale, its role in the British fiscal system, and its economic and political ramifications. Second, we have assembled a dataset from microfilms of local tax records during this period that indicate the numbers of windows in individual dwellings. Drawing on these data, we are able to test some basic hypotheses concerning the effect of the tax on the number of windows and to calculate an admittedly rough measure of the Excess Burden associated with the window tax. Third, we have in mind a pedagogical objective. The concept of Excess Burden (or "deadweight loss") is for economists part of the meat and potatoes of tax analysis. But to the laity the notion is actually rather arcane; public-finance economists often have some difficulty, for example, in explaining to taxpayers the welfare costs of tax-induced distortions in resource allocation. The window tax is a textbook example of how a tax can have serious adverse side effects on social welfare. In addition to its objectionable consequences for tax equity, the window tax resulted in obvious and costly misallocations of resources.
Ron Goeree - One of the best experts on this subject based on the ideXlab platform.
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The Excess Burden of rheumatoid arthritis in Ontario, Canada.
Clinical and experimental rheumatology, 2012Co-Authors: Jean-eric Tarride, M Haq, Daria O’reilly, Feng Xie, Lisa Dolovich, Hamid Reza Nakhai-pour, Gord Blackhouse, Ron GoereeAbstract:OBJECTIVES The purpose of this study was to estimate the Excess Burden of RA in Ontario, the largest province in Canada. METHODS The records of all adult Ontarians who participated in the Canadian Community Health Survey (CCHS) cycle 1.1 (2000/2001) and provided consent to data linkage were linked to the Ontario Health Insurance Program (OHIP) physician claims database and the Discharge Abstract Database (DAD) In-Patient (i.e. hospitalisation) and Day-Procedure databases. RA individuals (n=233) were identified using CCHS 1.1 and the physician claims database. A control group matched by age, gender and rural/urban status was created with three controls for one case (n=699). Socio-demographic variables, medical characteristics, health-related quality of life (HRQoL) and one-year physician services, hospitalizations and day procedures costs were determined for the RA and non-RA groups. Regression techniques were used to identify predictors of medical characteristics, utility and cost data. RESULTS The mean age of the population was 59 years and 76% were female. Compared to the matched control group, individuals with RA were statistically more likely to be obese, less educated, physically inactive and have a lower income. RA individuals also reported a statistically higher number of comorbidities and a lower HRQoL. Although no statistical differences were observed between the RA and non-RA groups for the costs associated with hospitalisations, the physician ($1,015 vs. $624, respectively) and day procedure ($102 vs. $51, respectively) costs were statistically higher among RA individuals. CONCLUSIONS These results indicate that the human and economic Burden of RA in Ontario is considerable.
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The Excess Burden of osteoarthritis in the province of Ontario, Canada.
Arthritis and rheumatism, 2011Co-Authors: Jean-eric Tarride, M Haq, Daria O’reilly, James M. Bowen, Feng Xie, Lisa Dolovich, Ron GoereeAbstract:Objective Little is known about the Burden of osteoarthritis (OA) in Canada. This study was undertaken to estimate the Excess Burden of OA in Ontario, the largest province in Canada. Methods The records of Ontarian respondents to the Canadian Community Health Survey (CCHS) who provided consent to data linkage were linked to the Ontario Health Insurance Program physician claims database and the Discharge Abstract Database Inpatient and Day Procedure databases. Patients with OA (n = 1,474) were identified using CCHS 1.1 and the physician claims database. To determine the Excess Burden of OA, a control group matched by age, sex, and rural/urban status was created, with 3 controls per case (n = 4,422). Sociodemographic and medical characteristics, health-related quality of life, and 1-year physician, day (outpatient) procedure, and hospitalization costs were compared between the 2 groups. Regression analyses were performed to identify predictors of medical characteristics, health utility, and cost. Results The mean age of the OA patients and the control subjects was 66 years, and 74% of all study subjects were women. Several differences were observed between patients with OA and subjects without OA in terms of socioeconomic and medical characteristics. On a scale of 0–1, the mean utility value associated with OA was 0.68, compared to 0.84 for the control group (P < 0.0001), representing a utility decrement of 0.16. The 1-year physician, outpatient procedure, and hospitalization costs were significantly higher in the OA group than in the non-OA group ($2,233 Canadian versus $1,033 Canadian, respectively; P < 0.0001). Conclusion These results indicate that the Excess Burden of OA in Ontario is considerable.
Wallace E. Oates - One of the best experts on this subject based on the ideXlab platform.
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The Window Tax: A Case Study in Excess Burden †
Journal of Economic Perspectives, 2015Co-Authors: Wallace E. Oates, Robert M. SchwabAbstract:The window tax provides a dramatic and transparent historical example of the potential distorting effects of taxation. Imposed in England in 1696, the tax—a kind of predecessor of the modern property tax—was levied on dwellings with the tax liability based on the number of windows. The tax led to efforts to reduce tax bills through such measures as the boarding up of windows and the construction of houses with very few windows. In spite of the pernicious health and aesthetic effects and despite widespread protests, the tax persisted for over a century and a half: it was finally repealed in 1851. Our purpose in this paper is threefold. First, we provide a brief history of the tax with a discussion of its rationale, its role in the British fiscal system, and its economic and political ramifications. Second, we have assembled a dataset from microfilms of local tax records during this period that indicate the numbers of windows in individual dwellings. Drawing on these data, we are able to test some basic hypotheses concerning the effect of the tax on the number of windows and to calculate an admittedly rough measure of the Excess Burden associated with the window tax. Third, we have in mind a pedagogical objective. The concept of Excess Burden (or "deadweight loss") is for economists part of the meat and potatoes of tax analysis. But to the laity the notion is actually rather arcane; public-finance economists often have some difficulty, for example, in explaining to taxpayers the welfare costs of tax-induced distortions in resource allocation. The window tax is a textbook example of how a tax can have serious adverse side effects on social welfare. In addition to its objectionable consequences for tax equity, the window tax resulted in obvious and costly misallocations of resources.
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the window tax a case study in Excess Burden
Journal of Economic Perspectives, 2015Co-Authors: Wallace E. Oates, Robert M. SchwabAbstract:The window tax provides a dramatic and transparent historical example of the potential distorting effects of taxation. Imposed in England in 1696, the tax—a kind of predecessor of the modern property tax—was levied on dwellings with the tax liability based on the number of windows. The tax led to efforts to reduce tax bills through such measures as the boarding up of windows and the construction of houses with very few windows. In spite of the pernicious health and aesthetic effects and despite widespread protests, the tax persisted for over a century and a half: it was finally repealed in 1851. Our purpose in this paper is threefold. First, we provide a brief history of the tax with a discussion of its rationale, its role in the British fiscal system, and its economic and political ramifications. Second, we have assembled a dataset from microfilms of local tax records during this period that indicate the numbers of windows in individual dwellings. Drawing on these data, we are able to test some basic hypotheses concerning the effect of the tax on the number of windows and to calculate an admittedly rough measure of the Excess Burden associated with the window tax. Third, we have in mind a pedagogical objective. The concept of Excess Burden (or "deadweight loss") is for economists part of the meat and potatoes of tax analysis. But to the laity the notion is actually rather arcane; public-finance economists often have some difficulty, for example, in explaining to taxpayers the welfare costs of tax-induced distortions in resource allocation. The window tax is a textbook example of how a tax can have serious adverse side effects on social welfare. In addition to its objectionable consequences for tax equity, the window tax resulted in obvious and costly misallocations of resources.
Jean-eric Tarride - One of the best experts on this subject based on the ideXlab platform.
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The Excess Burden of rheumatoid arthritis in Ontario, Canada.
Clinical and experimental rheumatology, 2012Co-Authors: Jean-eric Tarride, M Haq, Daria O’reilly, Feng Xie, Lisa Dolovich, Hamid Reza Nakhai-pour, Gord Blackhouse, Ron GoereeAbstract:OBJECTIVES The purpose of this study was to estimate the Excess Burden of RA in Ontario, the largest province in Canada. METHODS The records of all adult Ontarians who participated in the Canadian Community Health Survey (CCHS) cycle 1.1 (2000/2001) and provided consent to data linkage were linked to the Ontario Health Insurance Program (OHIP) physician claims database and the Discharge Abstract Database (DAD) In-Patient (i.e. hospitalisation) and Day-Procedure databases. RA individuals (n=233) were identified using CCHS 1.1 and the physician claims database. A control group matched by age, gender and rural/urban status was created with three controls for one case (n=699). Socio-demographic variables, medical characteristics, health-related quality of life (HRQoL) and one-year physician services, hospitalizations and day procedures costs were determined for the RA and non-RA groups. Regression techniques were used to identify predictors of medical characteristics, utility and cost data. RESULTS The mean age of the population was 59 years and 76% were female. Compared to the matched control group, individuals with RA were statistically more likely to be obese, less educated, physically inactive and have a lower income. RA individuals also reported a statistically higher number of comorbidities and a lower HRQoL. Although no statistical differences were observed between the RA and non-RA groups for the costs associated with hospitalisations, the physician ($1,015 vs. $624, respectively) and day procedure ($102 vs. $51, respectively) costs were statistically higher among RA individuals. CONCLUSIONS These results indicate that the human and economic Burden of RA in Ontario is considerable.
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The Excess Burden of osteoarthritis in the province of Ontario, Canada.
Arthritis and rheumatism, 2011Co-Authors: Jean-eric Tarride, M Haq, Daria O’reilly, James M. Bowen, Feng Xie, Lisa Dolovich, Ron GoereeAbstract:Objective Little is known about the Burden of osteoarthritis (OA) in Canada. This study was undertaken to estimate the Excess Burden of OA in Ontario, the largest province in Canada. Methods The records of Ontarian respondents to the Canadian Community Health Survey (CCHS) who provided consent to data linkage were linked to the Ontario Health Insurance Program physician claims database and the Discharge Abstract Database Inpatient and Day Procedure databases. Patients with OA (n = 1,474) were identified using CCHS 1.1 and the physician claims database. To determine the Excess Burden of OA, a control group matched by age, sex, and rural/urban status was created, with 3 controls per case (n = 4,422). Sociodemographic and medical characteristics, health-related quality of life, and 1-year physician, day (outpatient) procedure, and hospitalization costs were compared between the 2 groups. Regression analyses were performed to identify predictors of medical characteristics, health utility, and cost. Results The mean age of the OA patients and the control subjects was 66 years, and 74% of all study subjects were women. Several differences were observed between patients with OA and subjects without OA in terms of socioeconomic and medical characteristics. On a scale of 0–1, the mean utility value associated with OA was 0.68, compared to 0.84 for the control group (P < 0.0001), representing a utility decrement of 0.16. The 1-year physician, outpatient procedure, and hospitalization costs were significantly higher in the OA group than in the non-OA group ($2,233 Canadian versus $1,033 Canadian, respectively; P < 0.0001). Conclusion These results indicate that the Excess Burden of OA in Ontario is considerable.
