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Taxes and Lump Sum Transfers

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A Teaching Topic in Economic Analysis 

Taxes and Lump Sum Transfers

This topic examines the policy tool of direct cash payments to eligible people. It explores the two main categories of lump-sum payments: means-tested and universal.

Topic Learning Outcome: Appropriately utilize and interpret results of applying the principles of taxes and lump sum transfers to the analysis of public policy and management problems. 

Core Concepts associated with this Topic: 

NYU Wagner: GP-1018

Krugman, Paul and R. Wells. Microeconomics, 3rd edition. London: Worth Publishers, 2012. Chapter 5 (up to p. 141) and Chapter 7.

Sample Assessment Questions:

1.) Some economists have argued that lump-sum payments to poor people would be more efficient and beneficial than other anti-poverty policies such as higher minimum wages. Explain the logic underlying this argument.

2.) Identify one means-tested and one "universal" cash benefit paid by any level of government to citizens living in their jurisdiction. (The payment may only be paid to individuals who meet a certain criteria such as age or parenthood status - it need not be paid to every single citizen to meet this definition of universal. In this context, universal means only not means-tested by income or assets).    


Page updated by Sean Goertzen and Ben Eisen on 16 April 2015.


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School of Public Policy and Governance