Home >  Term: deadweight cost
deadweight cost

The extent to which the value and impact of a tax, tax relief or subsidy is reduced because of its side-effects. For instance, increasing the amount of tax levied on workers’ pay will lead some workers to stop working or work less, so reducing the amount of extra tax to be collected. However, creating a tax relief or subsidy to encourage people to buy life insurance would have a deadweight cost because people who would have bought insurance anyway would benefit.

0 0

Creator

  • summer.l
  •  (Silver) 607 points
  • 100% positive feedback
© 2024 CSOFT International, Ltd.