216 



MULTIPLE PURPOSE RIVER DEVELOPMENT 



with private development taxes would not need to be increased (or 

 could be reduced). Under these circumstances, who bears the 

 burdens not borne by power customers when public development 

 is undertaken? 



With federal development of the reimbursable feature, a certain 

 amount of tax shifting from the power customer to others results 

 from the need to finance essential public services. In addition, 

 there is a shifting of that part of the opportunity cost of factor 

 services which remains uncompensated by receipts from power sales. 

 The shifting of the federal tax liability would amount to some- 

 thing like 1705,000 annually; the shifting of costs, on the other 

 hand, would be on the order of $144,000 annually. 



Discovering the incidence of the shifted burdens by income classes 

 is similar to the problem addressed in Chapter IV, where the 

 incidence of the change in taxes had to be discovered in order to 

 determine an opportunity cost for funds raised by federal taxation. 

 The distribution of the shifted tax burdens by income class, assum- 

 ing the two tax models employed previously, is shown in Tables 

 39 and 40. 



TABLE 39. Incidence by Income Class of Shifted Tax Burden, 

 Assuming Tax Model A 



Income Change in personal Change in Weighted average 



classes exemption " excises '' incidence 



($ thousand) (per cent) (per cent) (per cent) 



to 3 19.5 9.0 17.4 



3 to 5 40.6 21.0 36.7 



5 to 7.5 23.6 28.0 24.5 



7.5 to 10 6.1 16.0 8.1 



10 to 15 4.2 10.0 5.4 



Over 15 6.0 16.0 8.0 



Total 100.0 100.0 " 100.1 



" Distribution of 80 per cent of total tax change assumed in Model A; obtained 

 from Table 4. 



'' Distribution of 20 per cent of total change; obtained from Table 9. 

 ■= Discrepancy in total caused by rounding. 



A comparison of the incidence of the tax shift reveals sharp 

 variations in the two tax models. Assuming a reduction in taxes 

 consistent with tax Model A, the burden would be skewed toward 

 the low-income groups; 54.1 per cent of the total would be borne 



