deadweight costs

6 examples (0.02 sec)
  • Most taxes -- including income tax and sales tax -- can have significant deadweight costs.
  • The only way to avoid deadweight costs in an economy that is generally competitive is to refrain from taxes that change economic incentives.
  • These not only result in lost revenue, but involve additional costs: for instance, payments made for tax advice are essentially deadweight costs because they add no wealth to the economy.
  • Optimal taxation theory is the branch of economics that considers how taxes can be structured to give the least deadweight costs, or to give the best outcomes in terms of social welfare.
  • Because deadweight costs are related to the elasticity of supply and demand for a good, it follows that putting the highest tax rates on the goods for which there is most inelastic supply and demand will result in the least overall deadweight costs.
  • The Ramsey problem deals with minimizing deadweight costs.