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Tax in Kind to Reduce Supply and Increase Income without Government Payments and Marketing Quotas
Author(s) -
Heady Earl O.
Publication year - 1971
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1238221
Subject(s) - government (linguistics) , payment , economics , public economics , gross income , transfer payment , business , income tax , distribution (mathematics) , state income tax , tax reform , finance , market economy , mathematical analysis , philosophy , linguistics , mathematics , welfare
Theoretically, a tax in kind can be used to reduce supply and increase net farm income. Applied through a share payment to government, private marginal costs are increased and supply is decreased. The government also has a food fund to be used for aid or similar purposes. The mechanism requires neither government payments nor compulsory market quotas to lessen supply. However, compulsory sharing is necessary to prevent “free riders.” Variants of the mechanism would include a gross sales tax collected in conjunction with income taxes. The mechanism provides a policy alternative with interesting potentials in income distribution.