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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in demand curve tax on buyer shouldnt it be movement along the graph?

if buyer has the burden of tax it shift the demand curve but tax comes under(according to me) in Price of the good so shouldnt it be movement along the graph this is the reasoning in my reading for ...
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Is Printing Money a Form of Hidden Taxation?

(I'm not a student specializing in Economics or Politics, just an undergraduate in Computer Science, so my understanding of basic economic concepts is limited. I'd appreciate it if the answer could ...
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Deriving the tax incidence formula -- what am I doing wrong?

I'm trying to derive the tax incidence for an excise $t$ so that producers receive $p$ and consumers pay $q=p+t$ per unit. The formula I am seeing everywhere is some version of $$ \frac{\mathrm{d}p}{\...
alcedine's user avatar
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What unforeseen consequences would arise from poor and rich employee taxes?

A poor-employee$^1$fee is a tax on businesses who pay their employees and contractors below some pre-determined, annually adjusted, hourly rate hereafter called the target minimum wage. At ...
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Does a per-unit tax shift the demand curve too when dealing with an inelastic supply curve?

I’m studying Tax Incidence from Stiglitz’s ‘Economics of the Public Sector’, and it says that the tax incidence doesn’t change whether I use a shift in the demand curve or one in the supply curve. ...
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Could a global tax agreement improve the Gini coefficient for income in all countries?

Does this line of reasoning make sense in terms of economic agents, even if implementation is highly unlikely? The Gini coefficient is an imperfect but reasonable measure of income inequality within ...
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What was the study that shows peoples' tax preferences shift when they get more information about their income?

I am trying to find a study I read a few years ago, but I forgot the names of the authors and the title of the study. I have already tried to search for the study on Google Scholar without much luck. ...
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Microeconomics question: Find consumer optimal choice after tax

Consider an economy with one farmer whose farm produces 100 units of food. The farmer can trade food for clothing from other countries, but he cannot produce clothing. The price of food in the market ...
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Would it work? A tax that automatically toggles on-off

Could we create a tax that automatically toggles on or off depending on the state of the economy taking into consideration that the revenues would be saved for further use, either to stimulate the ...
Denis Pageau-Sociétalogue's user avatar
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A generations funds to reduce the debt

In Canada, the Province of Quebec created a generations fund in 2006 in order to reduce the debt. As of March 2023, Québec’s net debt stands at $206.8 billion, or 37.4% of GDP.. Do you know if any ...
Denis Pageau-Sociétalogue's user avatar
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The equation for ad valorem or value tax is given by (1 + τ ) p1x1 + p2x2 = m. Does this imply that higher the p1 higher the tax?

In other words, do luxury goods get taxed more while cheaper goods are taxed less in the case of value tax? Any insight would be appreciated. Thank you!
Amit Daultani's user avatar
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Interest rates vs consumption tax brackets

I know only a little bit about economics, but I have been puzzled why interest rates should be used to combat inflation where direct solutions exist. I have some trouble understanding why interest ...
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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 ...
Roland's user avatar
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Compare cost and value of work in EU and Europe by taxes and social security

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 ...
Three Diag's user avatar
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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?
Hardik Patil's user avatar
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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 (...
Dendrobium's user avatar
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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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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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12 answers
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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. ...
Tamila Ambeon's user avatar
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1 answer
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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?
Angels Vásquez's user avatar
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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 ...
user93353's user avatar
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4 answers
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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 ...
Paul Johnson's user avatar
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2 answers
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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 ...
Richard Hardy's user avatar
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2 answers
35 views

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)\...
Richard Hardy's user avatar
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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 ...
Ricardo's user avatar
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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 ...
Richard Hardy's user avatar
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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: $...
Tele's user avatar
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3 answers
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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 ...
Abanob Ebrahim's user avatar
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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 ...
Arash Howaida's user avatar
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2 answers
280 views

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. ...
user42141's user avatar
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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(...
Franciscolli's user avatar
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1 answer
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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 ...
Andrea Marino's user avatar
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1 answer
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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 ...
yuyu's user avatar
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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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