Ian Parry

Abstract

This paper uses a numerical general equilibrium model to examine the quantitative importance of pre-existing factor tax distortions for the welfare effects of tariffs and import quotas. The presence of preexisting taxes can greatly raise the costs of these policies, possibly by over several hundred percent. For a tariff much ...

Although excise taxes on beer, wine, and spirits raise about $15 billion a year in revenue for federal and state governments, current alcohol tax rates in the United States are low by historical standards. In 1980, alcohol taxes represented about 22 percent of the pre-tax price of alcohol, whereas now, ...