In praise of wasteful spending

In the presence of distortionary taxation, the destruction of wealth–either by an act of government or an act of God–can be welfare improving, because it increases the supply of labor and therefore (holding government spending constant) allows distortionary taxes to be lowered. We show that under reasonable assumptions, there must be tax rates at which this effect occurs.

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Year of publication:	2014
Authors:	Landsburg, Steven E.
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 124.2014, 3, p. 449-451
Publisher:	Elsevier
Subject:	Optimal taxation \| Welfare \| Fiscal policy

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Type of publication:	Article
Classification:	D6 - Welfare Economics ; H2 - Taxation, Subsidies, and Revenue ; H3 - Fiscal Policies and Behavior of Economic Agents
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010930722