Questions tagged [taxation]
Refers to compulsory or coercive money collection by a levying authority, usually a government. The term "taxation" applies to all types of involuntary levies, from income to capital gains to estate taxes. Though taxation can be a noun or verb, it is usually referred to as an act; the resulting revenue is usually called "taxes."
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Does reinvestment of earnings decrease a corporation's tax
There are successful companies that don't make profits, such as twitter, uber, amazon. My question is:
Can a company just reinvest lots of money to avoid making a profit and avoid paying tax?
From my ...
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Compare EU an European taxes
In Sweden, the social security tax paid by the employer is 31,42%. Part of that goes to the pension of the individual employee. I wanted to compare the cost for the company to employ and the value for ...
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effect of tax imposition on consumer and supplier with a price ceiling
Use a supply and demand diagram, suppose there's a valid price ceiling, say at 2. Now we add a specific tax of 1, to suppliers, what is the new consumer surplus, producer surplus, and tax revenue?
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What formula describes the immediate drop in land value for a gradually-increasing land value tax?
I am aware that when a government announces that a land value tax will be passed, property values immediately drop.
However, I am curious to know if there is a known formula that approximately ...
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tax imposition on supply and demand curve
I've just started learning Economics a few days ago.
There's a question here that I can't understand. If a tax is imposed on consumers, the demand curve should shift to the left, and a new market ...
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Relation between High government debt to GDP ratio, financial stability of a country and repricing effect on balance sheet of banks
Was reading an editorial in which author wrote following:-
I understood it as follows:
India having High Debt/GDP(around 84%), means Foreign portfolio investors(FPIs) will have less confidence to ...
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Taxation and Labour Supply in the short-term
Can someone help me to explain this graph and who has tax incidence more?? In which, the vertical axis means wage per hour and the horizontal axis means the number of labor hours supplied per year. ...
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Can I express the relation between the parameter from statutory tax rate and effective tax function(GS,1994) as equation?
Can I get the equation which express the relation between the parameters of statutory income tax and those of the effective tax function(by using data from the previous tax reform, counter factual ...
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Why is a cash expense deducted but an expense in-kind not?
Say I am self employed and want a website for my business.
If I pay someone for the service I can, in most cases, deduct this from my profit to reduce my tax burden.
If I forego billable hours or I ...
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Opinions on implementing heavy taxation for low fuel efficiency vehicles as a policy measure to address rising gasoline prices
I am currently considering a policy proposal to address the issue of rising gasoline prices and their impact on our country. Specifically, I am contemplating the idea of implementing heavy taxation on ...
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How is the tax gap estimated?
I am looking at various definition of the tax gap. For instance the IRS:
"The gross tax gap is the difference between true tax liability for a given tax year and the amount that is paid on time&...
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What are the purely financial implications of exempting taxes for the public spending?
I've had this question for quite a long time by now ; wouldn't it be far more efficient in terms of administrative costs and beuraucratic efficiency to exempt public spendings from its taxes?
Of ...
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Calculating deadweight loss from tax for a monopolist
A monopolist has cost function $c(y) = y$ so that its marginal cost is constant at 1 per unit. It faces the following demand curve $D(p) = \begin{cases} \frac{100}{p}, &\text{if}&p ≤ 20 \\0,&...
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When per unit indirect tax is imposed on a good does the supply curve shift left or does it shift upwards?
My economics textbook says it shifts upwards but my school notes tell me it shifts leftwards. So which one is true? Or are they both true?
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Modelling the inefficiency of redistribution in case of proportional taxation and lump-sum subsidy
I would like to model the following situation in the simplest possible way.
First, a government imposes a proportional tax on the whole population, say, x% of income for each household.
But then, it ...
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Can progressive taxation improve competition?
Progressive taxation arguably supports competition by weakening the profit incentive for large players to dominate markets, while comparatively increasing the profit incentive for small players to ...
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How do you explain to a layman Why the rich should pay more taxes or or high income? [closed]
How do you explain to a layman "Why the rich should pay more taxes?".
For example, if a highly skilled person has to pay a high income just because they earn more with their skills (...
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What data / evidence is there to support the assertion that wealth taxes are ineffective because they're difficult to implement?
Whenever I see discussions of wealth taxes, inevitably one main assertion keeps being, well, asserted: "wealth tax will never work because it's too difficult to implement". Of course more ...
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How to interpret impulse response functions?
I need your help. How do I interpret the following impulse response functions in sequence to a growth factor shock in the context of an RBC model?
And how can it be that the marginal tax rate ...
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If 15 percent of jobs are becoming automated compared to 1993, why are retirement ages rising?
Given that human labour is less necessary with every year that passes, why not tax automation rather than raise the age of retirement?
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Is money we make completely taken away by taxes?
In my opinion, any money we make will be completely taken away by taxes. Here is my logic.
When I earn some money (x), I have to give some as tax to the government. ...
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regulation using taxes
Hello, I do not understand why option D is the correct answer, shouldn't the price paid by the consumers increase by the amount of the tax?
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What are the disadvantages of a simple indirect taxation system & how can those disadvantages be fixed?
I don't like the VAT/GST systems of indirect taxation because of several reasons, one of the reasons being stuff like Input Credit makes it quite complicated.
I was wondering what would be the ...
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Is the government putting a 20% tax on dividends equivalent to the government owning 20% of the company?
This question is about an answer user253751 wrote to one of my questions on Politics SE.
Consider a country where a government puts a 20% tax on oil and gas profits. Consider a different country ...
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Did cutting coporation tax in the UK lead to an increase in revenue?
In a quote in this report in the Daily Express Jacob Rees-Mogg asserts that:
Cutting corporation tax from 28 percent down to 19 percent led to about a 50 percent increase in corporation tax revenues ...
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Impact of the corporate tax rate on the cost of equity (Modigliani & Miller Proposition II)
Consider Modigliani & Miller Proposition II with corporate taxes. The cost of equity is
$$
R_E=R_U+(R_U-R_D)\cdot \frac{D}{E}\cdot (1-T_C) \tag{1}
$$
where $R_E$ is the cost of equity, $R_U$ is ...
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Effect of tax on required return on debt (and equity)
Debt financing has a tax advantage over equity financing, as the borrower gets reimbursed the tax on interest payments and other debt-servicing costs. Thus
$$
R_{\text{WACC}}=\frac{E}{E+D}R_E+(1-T_C)\...
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Ramsey Optimal Tax
Suppose there are $n$ goods ($x_i$ with prices $p_i$) to be taxed with a sequence of ad valorem taxes whose rates are given by $t_i$. The total tax revenue is $T = \sum_{i=1}^{n} t_ip_ix_i$. For a ...
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Cost of debt, taxes and WACC
I am studying the cost of debt. Without loss of generality, suppose the debt consists of bonds. On the one hand, some textbooks (e.g. Hillier et al. "Fundamentals of Corporate Finance: 4th ...
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Simple DCF model with inflation and taxes - Why do inflation and taxes only matter jointly?
I'm putting together a simple discounted cashflow (DCF) model for a theoretical real estate investment. I think the model is correct, but I can't understand some of the results.
The model is simply:
$...
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Does applying taxes increase the GDP by the same amount?
Let's say we have a country with a population of 1 million that are all working. The GDP per capita is 10,000 dollars so the GDP of this hypothetical country is $10 billion.
Now let's say that no ...
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Tax policy - theory versus practice
A came across this explanation for how policy makers approach taxes in my textbook:
Various taxes would compensate for irrational prices and other factors
outside the control of managers that ...
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How tax relates with utility function?
Suppose there are $n$ agents in an economy and the utility of person $i$ is given by $U_i(x_1, x_2, \cdots, x_n)$ where $x_j$ denotes the distance driven by each agent in the economy. One's utility ...
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Zero-rating export goods
How should the following paragraph be interpreted?
Businesses can zero-rate goods exported outside the European Union (EU) or sent to someone who is registered for VAT in another EU country. ...
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Set of implementable allocations (Overlapping Generations Models)
My question is from overlapping generations
$\Rightarrow$ I want to prove this part of the theorem
$\textbf{First}$ proceed by showing that the allocations in
a competitive equilibrium must satisfy(...
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Universal Limited Income
I am new here. Please pardon me for my naive question. However, I am a mathematician, so feel free to use any mathematics to model a toy situation.
I would like to understand what would happen if ...
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Where the budget of USA comes from?
When we say the budget of the defense department are 600 billions per year, where do the 600 billions comes from, are they just created from nothing by just increasing the money supply or they come ...
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Tax and welfare in Australia
In the following diagram the blue line represents the net income versus gross income, assuming the Australian progressive income tax, plus the Jobseeker welfare payments for a single person with no ...
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Is there a consensus about the relationsship between tax rate and tax revenue?
I have been looking at these charts by the Mercator think tank which describe tax revenue and tax rate as percentage of GDP for the United States.
Mercator think tank
Is there a consensus about the ...
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How does intertemporal substitution affect the equivalence between cap-and-trade and carbon taxes?
It is often stated that, with perfect information and neglecting administrative burdens, the following two policies are economically equivalent:
a carbon tax of $T$ that results in a equilibrium ...
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Are there estimates of how much salaries are affected by income tax rates?
A few years ago I've asked Why are some wage taxes officially paid by the employer, even though they're really paid by the employee? where @Relaxed mentioned the following:
Arguably, the notion that ...
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In what ways will taxing corporations reduce inflation?
President Biden Tweeted to the effect that taxing corporations will reduce inflation. When I look at what goods are experiencing the most inflation it seems to be things like groceries and rent. What ...
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Why we’d need carbon tax when we have nuclear plants?
Why would we ever need a carbon tax to reduce our emissions ? Isn’t it simpler and less painful for a country to have its State invest massively in nuclear plants or renewable energy to produce non ...
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Land value tax in GDP accounting
Using the Income Approach, it seems like a land value tax is counted as an "other taxes on production" component of GDP. But I don't understand why and how it counts as a tax on production ...
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When a global digital services company withdrows from the market of a specific country, does it affects the local tax income?
So, here are the conditions:
We have a country X
We have a company "Example Inc.", which provides some digital service in X. Let's say "Example Inc." is a game development company....
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Book reference for graphs explaining ad valorem and specific taxes
Does anyone know any book in which I can read and see graphs about the ad valorem or specific tax in monopolies or perfect competition?
I need a graph like this with the explanation but i can't find ...
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Leisure and consumption maximization trouble
Not really sure how to to b). For a) I have (wh + Y – τwh) which I'm sure is fairly simple. I've never dealt with a utility function this complicated before and really confused by the notation in ...
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Meaning of the word "repatriated" in this model
Hi, I am writing a thesis on transfer pricing and I am trying to figure out the meaning of what is written in this image. Company 1 is exporting some of its production to its affiliate company 2. So ...
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Why does a company need to pay 90% of its income as dividends to qualify as a REIT?
I came across this page on Investopedia that says that according to the US tax code, to qualify as a REIT, a company must pay a minimum of 90% of taxable income in the form of shareholder dividends ...
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What is the purpose of a congestion tax with refund?
A common argument in the economics of transportation is that publicly provided roads free of charge will result in congestion. Users only internalize the average costs of using the road instead of the ...
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