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

Per-Olov Johansson () and Bengt Kriström ()
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Per-Olov Johansson: Stockholm School of Economics and CERE

No 2010:5, CERE Working Papers from CERE - the Center for Environmental and Resource Economics

Abstract: 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.

Keywords: Cost-benefit analysis; marginal cost of public funds; excess burden; taxation (search for similar items in EconPapers)
JEL-codes: H21 H41 H43 Q51 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2010-03-30
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:slucer:2010_005

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