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Saying Too Little, Too Late: Public Finance Textbooks and the Excess Burdens of Taxation

Author

Listed:
  • Cecil E. Bohanon
  • John B. Horowitz
  • James E. McClure

Abstract

Taxation has several significant excess burdens, including enforcement costs, compliance costs, and deadweight losses. Most estimates find that raising a dollar of tax revenue costs much more than a dollar. Unfortunately, commonly used public finance textbooks do not integrate these costs into discussions of public goods or cost-benefit analyses. Not including these costs means that the optimal levels of public goods will be overestimated. Textbooks say too little, too late about the excess burdens of taxation. They could easily introduce excess burdens early, represent them in public goods diagrams, and integrate them throughout public finance instruction.

Suggested Citation

  • Cecil E. Bohanon & John B. Horowitz & James E. McClure, 2014. "Saying Too Little, Too Late: Public Finance Textbooks and the Excess Burdens of Taxation," Econ Journal Watch, Econ Journal Watch, vol. 11(3), pages 277-296, September.
    • Handle: RePEc:ejw:journl:v:11:y:2014:i:3:p:277-296
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    References listed on IDEAS

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    Cited by:

    1. Tyler Cowen & Alex Tabarrok, 2016. "A Skeptical View of the National Science Foundation's Role in Economic Research," Journal of Economic Perspectives, American Economic Association, vol. 30(3), pages 235-248, Summer.
    2. Andreas Bergh, 2015. "Yes, There Are Hayekian Welfare States (At Least in Theory)," Econ Journal Watch, Econ Journal Watch, vol. 12(1), pages 22-27, January.
    3. James McClure & Tyler Watts, 2016. "The Greatest Externality Story (N)ever Told," The American Economist, Sage Publications, vol. 61(2), pages 157-177, October.
    4. Danko Tarabar & Joshua C. Hall, 2016. "Explaining the worldwide decline in the length of mandatory military service, 1970–2010," Public Choice, Springer, vol. 168(1), pages 55-74, July.

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    More about this item

    Keywords

    excess burden of taxation; compliance costs; administrative costs; economic education; public finance; deadweight loss; welfare cost;
    All these keywords.

    JEL classification:

    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods

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