Why the Legal System is Not Necessarily Less Efficient than the Income Tax in Redistributing Income

28 Pages Posted: 8 Jul 2009 Last revised: 6 Oct 2009

See all articles by Dan Usher

Dan Usher

Queen's University - Department of Economics

Date Written: September 1, 2009

Abstract

A common, though by no means universally-accepted doctrine among practitioners of law and economics is that redistribution is no business of the law. This efficiency-only doctrine is not that redistribution is unworthy as a social objective, but that any given benefit to the poor is attainable at a lower cost to the rich through taxation than through the choice of legal rules. The rationale for the efficiency-only doctrine is that redistributive law creates a double distortion: an initial distortion arising from redistribution per se, through taxation or through law, and an additional distortion all its own. The efficiency-only doctrine is sometimes valid, but is far narrower than its advocates would seem to suggest, and is inapplicable to most of what is commonly thought of as redistributive law. Redistribution is best supplied by a balance of law and taxation.

Suggested Citation

Usher, Dan, Why the Legal System is Not Necessarily Less Efficient than the Income Tax in Redistributing Income (September 1, 2009). Available at SSRN: https://ssrn.com/abstract=1431742 or http://dx.doi.org/10.2139/ssrn.1431742

Dan Usher (Contact Author)

Queen's University - Department of Economics ( email )

99 University Avenue
Kingston K7L 3N6, Ontario
Canada

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