The marginal cost of redistribution is the real economic cost to upper-income households per dollar of benefit to lower-income households; it exceeds 1 because of the efficiency costs of redistributive policies. This article examines the determinants of this marginal cost for linear income tax...

Many economists refer to phenomena whereby the behavior of people affects the cost of some subsidy or alters the revenues from some tax as externalities. The author refers to these as “fiscal externalitiesâ€; an example is smoking imposing costs on taxpayers due to the existence of...

This article addresses three related but distinct issues relevant to the valuation of in-kind transfers. First, it shows that the census bureau's widely cited recipient value approach substantially underestimates the true cash equivalent value of in-kind transfers. Second, it shows that the true...

Two recent contributions to this journal (Rodgers, 1973; Yandle, 1974) have analyzed transfer programs in the presence of distributional externalities. Both authors rely on complicated two-sector geometrical constructions. It is the purpose of this note to show how a simpler geometry can be used to...

This paper compares tax reductions and transfers as methods of redistribution in a public choice setting. It shows that tax reductions, by altering the set of tax prices confronting voters, can have unexpected effects on the political determination of nonredistributive expenditure policies....