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The Window Tax

A Case Study in Excess Burden

Robert M. Schwab and Wallace E. Oates

Abril 2014, inglês

The window tax in Great Britain (1696-1851) provides a remarkable case of tax-induced distortions in resource allocation. Tax liabilities on dwelling units depended on the number of windows in the unit. As a consequence, people boarded up windows and built houses with very few windows, to the detriment of both health and aesthetics. Using data from local tax records on individual houses, the analysis in the paper finds compelling evidence of such tax-avoidance and goes on to make a rough calculation of the excess burden associated with the tax.