Measuring Effective Tax Rates in the Presence of Multiple Inputs: A Production Based Approach

Kenneth McKenzie, Jack Mintz and Kimberley Scharf

International Tax and Public Finance, 1997, vol. 4, issue 3, No 8, 337-359

Abstract: Abstract We suggest a new method for comparing tax regimes across jurisdictions. The approach aggregates taxes on inputs by focussing on production, rather than investment, decisions. Taxes on various inputs affect production decisions by increasing marginal costs. By calculating the difference between the tax-inclusive and tax-exclusive marginal cost of production, we determine the effective excise tax rate on marginal costs implied by all of the various taxes imposed upon the firm’s inputs. The effective tax rate on marginal costs provides a convenient summary measure of the potential impact of taxes on all inputs on production location decisions.

Keywords: Marginal Cost; Public Finance; Production Location; Summary Measure; Location Decision (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (29)

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DOI: 10.1023/A:1008620522432

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