We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Diamonds Are a Government's Best Friend: Burden-Free Taxes on Goods Valued for Their Values: Comment.
- Authors
Friedman, David D.
- Abstract
This article informs that in a recent article Yew-Kwang Ng, demonstrates that taxes on goods whose utility is derived entirely from their market value, "diamond goods," can provide revenue to the government with no cost to the taxpayers aside from the administrative costs of collecting them. Such a tax decreases the quantity of the good produced while proportionally increasing the value per unit quantity. Since the utility of the good depends only on its value, the smaller quantity produced produces the same total utility to consumers as the previous larger quantity. The revenue collected by the government is paid, in effect, from the reduced cost of producing a smaller quantity of the good. As can be seen from the quotation, Ricardo's burden-free tax is a tax on gold used exclusively for money. A reduction in the quantity of gold results in a proportional increase in its price, since the services presided by a coin depend on what it will buy, not how much it weighs, the smaller quantity produced as a result of the tax provides the same monetary services as the larger quantity produced before the tax.
- Subjects
COMMERCIAL products; TAXATION; UTILITY theory; REVENUE; YEW-Kwang Ng; MARK to market accounting; MARKET value; FAIR value
- Publication
American Economic Review, 1988, Vol 78, Issue 1, p297
- ISSN
0002-8282
- Publication type
Article