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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Gains tax for a given MARCS

Let's say you purchase a $10,000 - machine - with - a - salvage - value - of - $1000 in year 1 and at the end of year 9 you sell for $2500. Tax rate 21%. How to calculate gains tax on the machine? (...
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What would be the income tax rate be if it were 'flattened'?

In some recent conversations/speeches (It's voting season), I have noticed many people do not understand how a marginal income tax system works. Not understanding how they are only taxed at the ...
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Fixed vs Flat Tax Rate Question

Sam consumes, among other things, telephone services. He pays a fixed tax t on every phone call he makes (in addition to the regular price), and ends up paying 100 dollars every year in telephone ...
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Optimal tax level that raises revenue R < e given Hicksian demand elasticities

I have to find a uniform tax rate that raises revenue R < e and I am given a Hicksian cross price elasticity demand matrix below. I know I want to use Ramsey's first-best but I am not sure, how to ...
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Do countries with high taxes end up with low government debt but high private debt?

I'm curious if my observation that some Scandinavian countries (Denmark, Sweden) have high taxes, low government debt, but high private (in particular high household) debt is applicable more generally ...
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Are my conclusions correct in context of these examples of forceful extraction of money?

There are two examples, one for a bandit, the another one is for the government. Suppose we have a simple economy, a bandit and a teacher. The teacher can teach the bandit, but the bandit can't offer ...
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If you charge a single (indirect) tax rate, x% on all goods and services in a country, will you get x% back as tax revenues?

Assuming 100% compliance and no leakages, will charging a single tax rate of, say, 10% give us back 10% of the GDP back as tax revenues? What could these leakages be in real life that reduce this?
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Is there an index, parameter, ecuation, or anything to compare the tax pressure exercised by a country in relation to others countries?

In my country we are told often that the tax pressure over the companies and people is huge, making it unbearable and being a reason bankrupting the Economy, and one of the largests in the world. We ...
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Do local taxes help in paying back foreign debts?

I always wonder if increasing local taxes could help countries in paying off the foreign debts? I think taxes generate income in local currency. While foreign debts (from IMF, World Bank etc.) are to ...
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How do we define an efficient tax in microeconomics?

I am currently working through problems to study for an upcoming exam. I am not seeking a solution per se. I am looking at the intertemporal choice model. I am looking at two periods where consumption ...
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Can minimum or subsidies or tax cuts really work? Or will resultant inflation always counterbalance such initiatives? [duplicate]

I was born at the tail end of Eisenhower era and what is clear is that the dollar does not buy what it used to and this inflation has been more or less the trend for many decades. I have yet to hear ...
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Do I understand correctly that taxation-based government expenditures allow GDP to grow?

Suppose (it's an example) GDP= $1 000 000, Marginal Propencity to Consume(MPC)=0.25, that borrowing money is an absolute taboo for our government and that said government wants to increase GDP. What ...
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How much should it cost to close the beach?

For most of the past week a private surfing contest has closed off Steamer Lane - one of California's most popular waves - while paying only a few hundred dollars in permit fees. I think this is far ...
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Neoclassical model with proportional taxes

In a certain economy, time is discrete with periods $t=0,1,2,...$. The economy is populated by many households and identical firms. The utility of a household is: $\displaystyle\sum^{\infty}_{t=0}\...
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Is a 6% wealth tax a sustainable source of income?

Elizabeth Warren is planning to pay for various things with a 6% wealth tax on those with fortunes in excess of $1B USD. Now, right or wrong, this seems to be an awfully big annual scoop from a ...
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Which countries impose family income taxation?

I'm looking for a comprehensive overview of international income tax systems (OECD countries would be sufficient), showing which countries apply some sort of family taxation, i.e. married partners ...
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Why aren't we seeing carbon taxes in practice?

(See also a version of this question under politics, https://politics.stackexchange.com/questions/48764/why-arent-we-seeing-carbon-taxes-in-practice) It seems that there are many advantages to carbon ...
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Why can't the Land-Value Tax (in some cases) be passed on to tenants?

According to https://en.wikipedia.org/wiki/Land_value_tax: Because the supply of land is essentially fixed, land rents depend on what tenants are prepared to pay, That doesn't make any sense. If ...
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How Does Land Value Tax (e.g. Georgism) Decouple Lease Transfer From Improvement Transfer?

In theory, a land value tax (e.g. Georgist single tax), works by the government replacing property taxes with leases on land, as an incentive to invest in property improvements. This obviously works ...
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What would the consequences of an economy-wide 500EUR/tonne carbon tax be?

I recently calculated that Finnish car owners effectively pay 500 EUR per every tonne of carbon dioxide emitted from the tailpipe of a car. This payment is caused by three taxes that are in practice ...
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Efficiency-related reason for net social benefits from income taxation

Found a question that I cannot really find an answer to. I am being asked to consider an economy with many households and assume that the government can only generate revenue by taxing households' ...
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How to quantify tax liability of unrealized cap gains in mutual fund

Consider an S&P 500 mutual fund. At any moment the holdings of the fund include unrealized cap gains that should eventually generate tax liability. Thus, for a potential investor, the fair value ...
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How to assess the effect of changing VAT collection policy to the cash ratio of businesses?

I want to measure the effect of different Value Added Tax (VAT) policies to the liquidity of a business. I am using a simple liquidity measure, the cash ratio. There are three VAT policies which I ...
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Combining wealth and income tax

Did any country ever tried to combine wealth tax and income tax into one taxation policy? For example an income tax which has rate that is dependent on net worth, or some other tax of this manner?
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consequences of an inheritance tax on family owned businesses

Whenever I see the pros and cons of an inheritance tax discusses one common argument against it is as follows: If an inheritance tax is imposed on transferring a family owned business, then this tax ...
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Can corporate tax loss carryforward function like a sort of insurance policy?

I'm a graduate student in mathematics, with a casual knowledge of economics, so please let me know if this question is a non-sequitur or off base. Here's the intuition I'm trying to capture: Suppose ...
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Why do we use tax brackets?

Majority of countries (if not all) use tax brackets to define how much tax should the earning workforce pay. So we could have something like this. ...
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Is loss in tax revenue a negative externality?

I was thinking about how online gambling could cause numerous governments to face a reduction in tax revenue from conventional gambling, upon which taxes do apply in most countries. If governments ...
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Why does Canada have only half the taxes of the UK in the OECD NTCP data?

This data sums taxes with healthcare contributions, private or not, so not surprisingly the US scores high on that measure. But why is Canada so suspiciously low? I mean Canada has less than half (11....
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Which economist suggested solely printing money to borrow and not have bonds?

I remember reading this really interesting idea by some economist that a government need not issue fixed-term debt such as bonds, notes or bills. Instead all it could do is print money and use it to ...
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What impact does deficit spending have on economic inequality?

Taxation schemes can be classified as progressive (the tax rate is higher for higher income brackets), regressive (the tax rate is lower for higher income brackets), or neutral (the tax rate is the ...
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Can a progressive policy be solely funded by a regressive or even proportional tax?

Under what criteria a regressive or proportional tax can be used to fully fund a welfare program or policy that it's progressive (i.e., one that benefits lower-income people more) in nature? Are there ...
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Yang's Impact on Algorithmic Trading?

Presidential candidate Andrew Yang has published the following policy proposals on his website: 1. FINANCIAL TRANSACTION TAX Financial markets have grown dramatically over the past decades. ...
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Why is income tax so high? (UK) [closed]

Granted, I expect this question could be easily answered, but I cannot find a definitive reason as to why income tax is pinned at such a high rate in the United Kingdom. I'm not much of an economist, ...
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Tax by inflation

I am interested in a system where the state prints new money to cover all its expenses. (There is no direct tax collection.) I'm interested in anything you might have to say about this system, but to ...
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Does the contractionary monetary effect of tax conpensate for its deadweight loss?

We all know that if the government impose a tax on a product, then tax revenue is less than loss in consumer and producer surplus. This is known as deadweight loss. We also know that taxing is a ...
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Show that this income tax is effectively a lump sum tax

This is a standard income, leisure tradeoff model. $$ \max_{c,l} \min\{c; l\} $$ $$s.t. \space c = w(1-t)(1-l)$$ $l$ is leisure (where total time is 1), $w$ is wage, $c$ is consumption, and $t$ is ...
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How to calculate capital investment?

So i have this question: After spending 3 million on research, Better Mousetraps has developed a new trap. The project requires an initial investment in plant and equipment of 6 million. This ...
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Can a progressive marginal taxation be regressive in terms of average tax rate?

Or does progressive marginal taxation imply that it is a progressive average taxation? Here, I mean that if $T(Y)$ is a tax function of income, marginal tax rate would be $dT/dY$ and average tax rate ...
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How to calculate the after tax WACC

So i have this question: Assume the following data for U&P Company: Debt (D) = $100 million; Equity (E) =$300 million; rD = 6%; rE = 12%; and TC = 30%. Calculate the after-tax weighted average ...
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Difference between corresponding and secondary tax adjustments in transfer pricing

What is the exact difference between a secondary tax adjustment and a corresponding tax adjustment? Are these two adjustment not the same? Does a secondary tax adjustment only happen with regard to ...
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Does land value tax create an incentive to merge land ownerships?

LVT is "a tax on the unimproved value of land", and "in theory, it does not distort decision making". But if I own land then improvements such as buildings on my neighbour's land can easily increase ...
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Protectionism and smaller countries

If I understand correctly, for a small country, whose supply chains needs to be transnational, protectionism introduces market inefficiency such that even unilaterally removing tariffs would be ...
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Is there empirical evidence that (sales or income) tax rates affects GDP growth?

We often hear in the media and from politicians that tax cuts stimulate economic growth. The theory would probably be that less taxes give people more money in theri pockets. With this money they ...
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Measuring inequality at the zip code or county level in the United States?

I am trying to calculate a statistic for inequality at the zip code or county level in order to merge with another data set. I am using IRS SOI data, but the data given is returns by AGI bin (i.e., 1-...
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Has there been any analysis of the proportional tax burden of domestic SMEs versus multinational corporations?

Has there been any analysis of the proportional tax burden of domestic SMEs versus multinational corporations? It would seem that base shifting would give multinationals a significant tax advantage ...
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If I want to measure the total VAT revenue, can I just look at the final VAT paid?

I am trying to measure how much money the government receives back as a result of an investment. I know the net value of the tax paid by the company the grant was made to, call it x. That 'x' is ...
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Calculating marginal tax rates when near a cliff

When using tax and transfer microsimulation models, a common approach for calculating marginal tax rates is to recalculate the tax liability when adding $1 to earnings. This will take into account ...
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Why tax investment?

I assume that investing is more useful than consuming for society as a whole, at least in the long run. But then why isn't the government taxing consumption more and investment less? This would create ...