We provide a model for analyzing effects of the tax system and spending programs on the determination of government spending and taxpayer welfare and show that a tax system or spending program which is suboptimal from a Ramsey point of view can improve taxpayer welfare because the system creates...

A common view in public finance is that there is an efficiency-redistribution tradeoff in which distortions are tolerated in order to redistribute income. However, the fact thatso much public- and private redistributive activity involves in-kind transfers rather than cash may be indicative of...