| This paper develops an analytical framework for comparing the marginal excess burden (MEB) of labor taxes and various commodity taxes, allowing for externalities and interactions between the taxes, and applies the analysis to the United Kingdom. Due to parameter uncertainty and model simplifications the results should be viewed with caution, nonetheless there are some useful insights. For example, even though taxes on petrol and cigarettes confer externality benefits, and these goods are relatively weak leisure substitutes, the MEB of these taxes may substantially exceed that of the labor income tax, except under "high" scenarios for externality benefits. In contrast the MEB for alcohol taxes may be smaller than that of the labor tax, though it is still... |
