Journal Article The Fallacy of Using Long-Run Cost for Peak-Load Pricing Get access William Vickrey William Vickrey Columbia University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 100, Issue 4, November 1985, Pages 1331–1334, https://doi.org/10.2307/1885686 Published: 01 November 1985

Arrow's theorem, 507. — Proof of the Arrow impossibility theorem, 509. — The variations from Arrow's treatment, 511. — Relaxing the postulates, 512. — Intransitive social orderings, 513. — Restrictions on individual choice, 513. — Relaxing the independence postulate, 516. — Strategic misrepresentations of preferences, 517. — Social welfare functions based on cardinal utility, 519. — Calibration by threshold of discrimination, 519. — Independence of marginal utilities as a criterion of cardinality, 522. — Risk, utility and income distribution, 523. — Interpersonal comparisons and differences in tastes, 525. — Utility calibration in terms of a field of alternatives, 526. — Different concepts of a field of alternatives, 528. — Economic choice and socio-political choice, 530. — Evaluation and role identification, 530. — A hierarchy of social evaluations, 531. — Possible extremes of egalitarianism and anti-egalitarianism, 532. — Social choice in a dynamic world, 534. — The role of economics, 534.

PRESENT methods of levying succession taxes in the form of estate, inheritance, and gift taxes leave much to be desired. Relatively minor changes in the form of transmission of property often produce substantial differences in tax. In order to take advantage of these differences, individuals are often led to dispose of their property in ways other than those that would obtain in the absence of such avoidance opportunities. The patterns of ownership thus encouraged by the operation of the tax are not necessarily better, and in fact are often considerably worse, considered from the standpoint of the community at large, than the patterns that would be selected in the absence of such arbitrary pressures. The root of the difficulty is that the tax is ordinarily computed on each transfer separately with very little if any reference to the relation of that transfer to past and future transfers of the same or equivalent property. The taxpayer is thus under considerable pressure to provide for the transfer of his property to the ultimate beneficiaries with as few taxable intervening transfers as possible. Property is accordingly bequeathed directly to children, grandchildren, and great-grandchildren rather than in the more normal sequence of transfer first to the widow, then to the children, and in turn to the grandchildren and great-grandchildren. The testator frequently may attempt to restrict the control of the remote heirs over the property thus directly bequeathed to them by the setting up of various forms of trust; in addition, by setting up trusts for the benefit of minors and even of unborn individuals, the number of taxable transfers may be still further reduced. In some states this may go to the extent of removing the corpus of the estate from further succession taxation for extended periods. The forms of property thus promoted have serious effects on the economic life of the community, in that they multiply the overhead of institutional investment, reduce the amount of capital available for speculative ventures, and are frequently less suited to carrying out the desires of the testator than less involved forms of devolution that might have been selected in the absence of tax pressures.

Merton Miller produce some interesting propositions concerning the degree to which cyclical fluctuations may be mitigated through the automatic response of tax revenues to changes in national income.' In the case of the individual income tax, it is possible to go further and derive certain upper bounds to the degree to which the yield of such taxes may be made responsive to income fluctuations, and thus demonstrate even more severe limitations

Reviews the book "Business Concentration and Price Policy," by M.A. Adelman, Jesse Markham, Walter Adams, George Stocking, Richard Ruggles, Caleb Smith, Milton Friedman, Corwin Edwards, Fritz Machlup,

Reviews two books on taxation. "The Nature and Tax Treatment of Capital Gains and Losses," by Lawrence H. Seltzer and "Federal Income Tax Treatment of Capital Gains and Losses."