Subsidy is Worse than Tax

William Barnett, Jerry W Dauterive and Walter Block

The IUP Journal of Public Finance, 2008, vol. VI, issue 4, 62-71

Abstract: Our claim is a limited one: for strict purposes of economic welfare, subsidies are worse than taxes. This is because while taxes divert resources, necessarily, to the second best alternative, which is pretty good all things considered, subsidies come with no such guarantee. Instead, subsidies can misallocate goods, services, labor and capital to far worse alternatives than that.

Date: 2008
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