A note on CostBenefit Analysis, the Marginal Cost of Public Funds, and the Marginal Excess Burden of Taxes

In this note we discuss how to treat taxes in a cost-benefit analysis (CBA). In particular we relate the shadow price of taxes in CBA to the concepts the marginal cost of public funds MCPF) and the marginal excess burden (MEB) of taxes. In particular we demonstrate that the MCPF is equal to one plus the MEB for a marginal increase in a distortionary tax.

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Year of publication:	2010-03-30
Authors:	Johansson, Per-Olov ; Kriström, Bengt
Institutions:	CERE - the Center for Environmental and Resource Economics
Subject:	Cost-benefit analysis \| marginal cost of public funds \| excess burden \| taxation

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Extent:	application/pdf
Series:	CERE Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	The text is part of a series CERE Working Papers Number 2010:5 15 pages
Classification:	H21 - Efficiency; Optimal Taxation ; H41 - Public Goods ; H43 - Project Evaluation; Social Discount Rate ; Q51 - Valuation of Environmental Effects
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008692963