Review of Austrian Economics, Volumes 1-10

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The Preferred Tax Type: Comment on Herbener

The Review of Austrian Economics

Tags Taxes and Spending

07/20/2005Alexander Tabarrok

A standard theorem in neoclassical public finance holds that income taxes are preferred to equal revenue excise taxes. Herbener (1988) rejects this theorem because the proof is (a) based upon methodologically suspect indifference curves and (b) must follow a certain conceptual ordering-namely the excise tax must first be placed upon consumers who are then given the option of facing an equal-revenue income tax and not vice versa. This comment demonstrates that indifference curves are not required to prove the theorem nor must the proof of the theorem follow a specific order.


Alexander Tabarrok

Alexander Tabarrok is a Canadian-American economist and co-author of the economics blog, Marginal Revolution. He is a professor at George Mason University and a fellow at the school's Mercatus Center. In addition, Tabarrok is director of research for the Oakland, California based  think tank the Independent Institute.


Review of Austrian Economics 5, No. 2 (1991), pp. 107-110.