Ghetto tax

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The term ghetto tax is used to describe the generally higher prices those with low incomes pay for goods and services, particularly those living in poverty-stricken areas.[1][2][3]

Contents

Economic principles

A ghetto tax is not literally a tax; it is a situation in which people pay higher costs for equivalent goods or services simply because they are poor, or live in a poor area. A paper by the Brookings Institute, titled "From Poverty, Opportunity: Putting the Market to Work for Lower Income Families"[4], is widely cited as a study into ghetto taxes.[1][5]

The problem of ghetto taxes is closely associated with mobility; one study in the USA showed that higher prices might be prevalent in some neighbourhoods, but people with access to a car would have more access to affordable goods and services elsewhere, whilst those without a car would bear the brunt of higher local prices.[2][6]

Tackling the problem of ghetto taxes is difficult. For instance, high-interest-rate loans are more likely to be taken by people on lower incomes; however, a study has shown that capping interest rates results in reduced credit availability for those people who most need it. This may make the problem worse.

Examples

See also

References

  1. ^ a b Eckholm, Erik (19 July 2006). "Study Documents ‘Ghetto Tax’ Being Paid by the Urban Poor". The New York Times. http://www.nytimes.com/2006/07/19/us/19poor.html?_r=1. Retrieved 14 August 2011. 
  2. ^ a b c Talukdar, Debabrata (2008). "Cost of Being Poor: Retail Price and Consumer Price Search Differences across Inner-City and Suburban Neighborhoods". Journal of Consumer Research 35 (3): 457. doi:10.1086/589563. JSTOR 589563. 
  3. ^ a b Brown, DeNeen L. (18 May 2009). "The High Cost of Poverty: Why the Poor Pay More - washingtonpost.com". The Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2009/05/17/AR2009051702053.html. Retrieved 14 August 2011. 
  4. ^ "From Poverty, Opportunity: Putting the Market to Work for Lower Income Families - Brookings Institution". July 2006. http://www.brookings.edu/reports/2006/07poverty_fellowes.aspx. Retrieved 14 August 2011. 
  5. ^ "The Ghetto Tax | Blog | NextBillion.net | Development through Enterprise". 3 August 2006. http://www.nextbillion.net/blog/the-ghetto-tax. Retrieved 14 August 2011. 
  6. ^ "Georgetown Law Faculty Blog: Market Failures Mean The Poor Still Pay More". 20 July 2006. http://gulcfac.typepad.com/georgetown_university_law/2006/07/more_than_thirt.html. Retrieved 14 August 2011. 
  7. ^ a b "The Higher Prices Facing Lower Income Consumers". 17 July 2006. http://www.brookings.edu/metro/pubs/20060718_findings.pdf. Retrieved 14 August 2011. 
  8. ^ Giskes, K; Kunst, A E; Ariza, C; Benach, J; Borrell, C; Helmert, U; Judge, K; Lahelma, E et al. (1 July 2007). "Applying an Equity Lens to Tobacco-Control Policies and Their Uptake in Six Western-European Countries". Journal of Public Health Policy 28 (2): 261–280. doi:10.1057/palgrave.jphp.3200132. PMID 17585326. http://www.palgrave-journals.com/jphp/journal/v28/n2/full/3200132a.html. Retrieved 14 August 2011. 
  9. ^ Klontoff E, Fritz J, Landrine H, Riddle R, Tully-Payne L. The problem and sociocultural context of single-cigarette sales. J Am Med Assoc. 1994;271:618–620.
  10. ^ IFS. January 2006. http://www.ifs.org.uk/edepo/poor_pay_more.pdf. 
  11. ^ Hausman, Jerry A.; Jerry A. Hausman, MIT; J. Gregory Sidak, American Enterprise Institute (April 2004). "Why Do the Poor and the Less-Educated Pay More for Long-Distance Calls?". The B.E. Journal of Economic Analysis & Policy 3 (1). doi:10.2202/1538-0645.1210. http://www.bepress.com/bejeap/contributions/vol3/iss1/art3/.