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- Title
DISCUSSION.
- Abstract
This article discusses the concept of tax efficiency from the narrows of costs of tax collections into which it frequently falls in discussions of tax policy and highlights the effects of tax policy upon the two most important economic variables in the social welfare function; namely, the distribution of income (equity) and the size of the total income to be distributed (efficiency). Determination of the best combination of these two variables necessitates knowledge of what combinations are possible; i.e., how the possibilities are affected by government's tax and expenditure policy and how various combinations are ordered in the preference system of the community. Minimum tax collections per dollar of government expenditure without specifying the kinds of taxes to be levied, could not be seriously considered as an objective of tax policy. The amount of taxes to be collected is itself a variable which need not be economized. If one level of tax collections is not sufficiently deflationary, there is another higher level which is. Minimizing the deflationary impact of a given amount of taxes-or minimizing the amount of tax collected in order to provide a given deflationary impact, would conflict with concepts of equity.
- Subjects
TAX remission; TAXATION; FREE enterprise; INCOME inequality; PUBLIC spending; COST effectiveness; PRICE deflation; GOVERNMENT policy; EQUITY (Law)
- Publication
American Economic Review, 1950, Vol 40, Issue 2, p405
- ISSN
0002-8282
- Publication type
Article