The Excess Burden of Taxation and Public Agricultural Research

It has recently been suggested that studies of rates of return to public agricultural research should be discounted by the amount of the dead weight loss (or excess burden) associated with the use of tax funds. Although the concept of excess burden is deeply rooted in the history of economic thought and variants are utilized in some areas of policy and trade, it is not widely or well known. This paper outlines the main steps in the development of the concept, examines trends in the use of public funds for agricultural research in the United States from 1915 to 1984, and discusses the relevance and utilization of the concept in this context. The general notion of discounting appears to be theoret­ically justified, but is difficult to implement because of the difficulty in deriving appropriate measures of excess burden.