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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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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Question on tax rate

I want to include the tax rate in a country in my study. I use the tax rate because the higher the tax rate the larger is the welfare state, which is expected to decrease income inequality. But I don'...
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Does your country have a Tax on Industrialized Products?

In Brazil, when an industry sells a product it has manufactured, the government collects a 5% tax (called IPI - Tax on Industrialized Products). I ask: is there a similar tax in your country? If so: ...
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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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capital gain tax and lump-sum transfer payment Under the perfect market benchmark

Under the perfect market benchmark where I assume that there is no trade and agents are identical, Can there be capital gain tax and lump-sum transfer payment? or, there is no capital gain tax and ...
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writing budget constraint with capital gain tax

I have the following budget constraint Consumption in period 2 = Wealth in period 2 = Wealth in period 1 + Capital gain from risky assets + The endowment where Gain of risky assets = # of holding ...
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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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Diff-in-diff treatment problem

I have a cuestion about a possible aplication of a diff in diff in labor economics. I'm thinking for my master's thesis of comparing the effects of a reduction of the payroll tax in Argentina, which ...
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How do I show an increase in the price of a good in a Pigouvian Tax model on a negative consumption externality

I've drawn a Pigouvian tax model for a negative consumption externality for Petrol consumption. if the price of petrol increased how would I incorporate this into my model. I've left a photo of said ...
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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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How do I illustrate (with a diagram) an increase in supply after a decrease in supply due to excise tax (while the excise tax is still in place)?

If a good currently has supply curve S1, then the govt. imposes an excise tax on it, this causes the supply to decrease and shift to the left, becoming S2. But what happens if the supply suddenly ...
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Showing the effects of tax differences between firms with an economic model

I am currently working on a master thesis and as a part of my analysis on tax planning I want a good economic model that shows how tax differences between foreign owned firms and local firms effects ...
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Automatic stabilisers - Direct taxes vs Indirect tax

I have been reading a paper by the OECD about what can be done to strengthen financial stabilizers. https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=ECO/WKP(2020)44&...
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How does elasticity of demand of a public good affect tax rate?

Consider a situation with 2 consumers with one private good, and one public good; where consumers are endowed with fixed amount of private good $M_i$, and give up portion of their private good to ...
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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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How does running business as a "tax write-off" improve your position?

This article in ProPublica lists a lot of cases of billionaires who run businesses at a loss and then claim them as tax deductions. But apart from providing some eye-watering figures the article doesn'...
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How accepted is the theory that high marginal tax rates on the on corporations encourages higher labor wages/innovation?

I was watching a David Graeber and he put forward the idea that Bell Labs and high wages existed in the 50's and 60's in large part because there was a high corporate and marginal tax rate, so rather ...
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Is there any economical rational for a government to maintain low property taxes and rather high work-related taxes?

I have recently heard an analyst arguing that where I live (Romania) we have very low property taxes (0.08% to 0.20% for residential buildings), but rather high work-related taxes. This was presented ...
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Why is Deadweight Loss Bad for Society?

I have learned that in a perfectly competitive market in the absence of externalities, taxes will impose a deadweight loss upon society, due to reduced market participation by consumers and producers. ...
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Why are cryptos recognized as a "currency"?

My question is pretty straightforward: Why a "payment" with cryptos is recognized as a "payment" (at least in the US) and thus you need to pay taxes over it? My question come from ...
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Why agricultural subsidies were targeted in 1991 Indian Economic Liberalization

In the book Half - Lion: How P.V Narasimha Rao Transformed India, the author mentions that one of the contentious reforms for 1992 were agricultural subsidy reforms. I don't understand how is this ...
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When solving for a new equilibrium price after the institution of a tax, I keep getting a price that is lower than my previous equil price. Why?

For Example: $D(p) = 50 - p$ $S(p) = p/20$ The p* of this problem is $47.61$, however, when I add a .1 proportional tax I get an answer of $43.29$ which does not make sense because that price is lower ...
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Is Fiat Money Ultimately Tax Based?

First, I am not an economist, so seeking general "good enough" answers. Since Nixon went off the gold standard the U.S. dollar has been a fiat currency backed by federal debt. While I ...
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Interaction of redistributive taxes, monetary policy and the growth rate

While studying macroeconomics, interaction with taxes are not seen to importantly. I am though interested in an interaction with redistributive taxes (such as the income or the inheritance tax rate), ...
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3 votes
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Where can I find resources that show the median or mean effective taxation on households in the United States divided into percentiles?

I am looking for a resource similar to this website that shows the mean effective federal taxation on households in different percentiles broken down into percentiles (and even shows historical data ...
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Effect of tax plus rebate on fuel consumption

I'm studying the Slutsky equation and an example in the text discusses the effect of a tax plus rebate on the consumption of fuel. Suppose the original price of fuel is $p$, tax is $t$, $x$ is the ...
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4 votes
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Understanding an article in the BMJ about the sugar tax

The research paper Changes in soft drinks purchased by British households associated with the UK soft drinks industry levy: controlled interrupted time series analysis was examining the impact of the ...
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What is the purpose of taxes if central banks can fund deficit spending?

Somewhat straight forward. If the federal reserve can print money to buy treasuries to fund deficit spending, what is the purpose of taxes? Sure, taxes reduce the amount of deficit that needs to be ...
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Investors in index funds pay lower taxes, but higher taxes on dividends?

Doesn't the second para. beneath contradict itself? Don't the boldened words contradict each other?       So let’s pick up where we left off a few chapters ago. Recall that the net annual return was ...
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Why is the Social Security tax split midway between employer and employee?

On page 99 of Hidden Order, David Friedman writes: Social Security taxes are paid half by the employer and half by the worker. How would the effect of the tax change if it were collected entirely ...
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Does Progressive Taxation Actually Follow The Decreasing Marginal Value of Wealth?

From my understanding, the application of a progressive income tax (increasing rate based on income level) follows from the assumptions of: "Equal Sacrifice" - everyone's "sacrifice&...
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4 votes
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Is an income tax always more favourable for consumers compared to ad valorem/quantity tax?

I'm studying the optimal choice of consumers with regards to taxation. I read that for consumers, income tax is generally (for Cobb-Douglas preferences) preferred compared to ad valorem tax: If the ...
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1 vote
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What empirical evidence is there of distortions when capital gains taxes are introduced or raised?

I have heard that introducing capital gains taxes would create distortions in investments, and that the optimal tax rate for capital gains is actually 0. My question is what observed evidence is there ...
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4 votes
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Are spectrum auctions a tax?

According to Wikipedia, A spectrum auction is a process whereby a government uses an auction system to sell the rights to transmit signals over specific bands of the electromagnetic spectrum and to ...
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Competitive markets, taxation and international trade

Suppose that in a competitive market, the supply function is given by $S(p) = 5000(p-2)$ and the demand function is given by $D(p) = 2000(16-p)$. Suppose still, that in order to recompose its' budget ...
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6 votes
3 answers
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How can consumption taxes be made progressive?

Consumption taxes (VAT, sales tax) are mostly applied at a flat rate. Some countries have exemptions or lower ratings for essential goods. But even with that, the tax is much less progressive than ...
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Shouldn't corporate tax be calculated based on EBIT instead of EBT?

When I was studying Corporate Finance in university, I was surprised to learn that it is more advantageous for corporations to take more debt (even if they don't need to) because it creates tax shield ...
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How do increasing tax rate helps control inflation? [closed]

Also, do the opposite that is lowering tax rate controls deflation?
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How much revenue could an 100% land value tax be able to generate for the Indian government?

So as a Georgist (follower of Henry George), I believe most form of taxation is immoral and economically inefficient except the land value tax (not to be confused with property taxes) and other ...
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Why are shares exempt from GST?

Why is the financial trading sector exempted from consumption taxes? For example, shares seem to be exempt from GST in both Australia and Canada. What is the intention behind this? Is it common for ...
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Do all taxes come out of rents (ATCOR)?

Mason Gaffney (2009) coined the term ATCOR (all taxes come out of rents) for his finding that taxes depress land rents. The meaning and relevance of ATCOR is that when we lower other taxes, the ...
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