This study assesses cluims [hut shifrng toward greater indirect tures will reduce evasion, thereby improving the distribution uj red net incomes und generuting u rrcal dividrnd: Pructiiul considerutions suggest thut industry sectors which evude incomr tuxes will ulro be strongly inclined to evude indirrct tuxes on their output.A generul rquilibrium unulysis fin& thut changing the tur mix will huve little or none of the cluimrd unti-evusion or distributionul rflrcrs. Intwusrd indirect t a r s on rvudrrs' consumption purchws will be shgtrd onto suppliers in the compliunt sector. Evudrrs will rnd up rvuding less incomr tuxrs but rvuding inore indirrct t a r s @ 1993.

No abstract

No abstract

No abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.. University of Wisconsin Press andThe Board of Regents of the University of Wisconsin System are collaborating with JSTOR to digitize, preserve and extend access to The Journal of Human Resources. ABSTRACTThree subsidy schemes for income maintenance are analyzed for their static incentive effects on labor supply. A discussion and critique of regressivity in schemes such as the "income-work" subsidy is offered. The dynamic incentive effects, the costs and benefits, and the redistributive patterns of the schemes are treated with political and social as well as economic considerations. Special attention is devoted to the analysis of a wage subsidy, which has been neglected in the literature on maintenance. The new labor supply is derived for a wage subsidy, and the effect of the wage subsidy in "guaranteeing jobs" and an analogy to the employer subsidy are described. An attempt is made to exploit the static incentive advantages of the wage subsidy over the two income subsidies treated here. The workability of categorical and "self-categorizing" combined wageand-income subsidy programs is opened for further research.Economic analysis of income maintenance has dealt largely with the problem of deterioration in work incentives of the poor when their incomes are subsidized. Several reasons account for the paramountcy of the incentives question in the treatment of this important public issue. Of course, there are the purely economic reasons for concern-the costs of the program to the government and to society depend upon the degree of work curtailment under a subsidy scheme. If a maintenance program is to achieve its primary objective of raising low incomes, it must not allow its beneficiaries to reduce their earnings too much. And if the internal tax rate of a maintenance The author is a graduate student in economics at Massachusetts Institute of Technology. * The author wishes to thank M.I.T. Professors Lester Thurow, Michael Piore, Edwin Kuh, and Duncan Foley for their comments and suggestions. The author alone is responsible for the views expressed here and for any errors. | THE JOURNAL OF HUMAN RESOURCESprogram must be kept low to avoid large disincentives to work, then the program will have to cover many of the nonpoor as well. Longer-run and less crystallized economic notions also enter into the feeling that a maintenance system should be designed so as not to discourage work on any substantial scale. It is widely held that the only long-run relief for the poor is their upgrading for absorption into the more highly productive parts of the economy. Beyond such economic reasoning looms a tacit realization that society is not eager to enact a program which allows the poor to receive p...