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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273 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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1 answer
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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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What are the evasion/avoidance rates for transaction taxes that have been implemented elsewhere & how does this compare with more traditional taxes?

Alternatively, The introduction of Single Transaction Tax would help to curb out Tax Evasion & Black Money? The Arthakranti (a NGO working on Economic Reform in India) suggests the proposal of Tax ...
2 votes
2 answers
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"Wealth tax" on illiquid assets, how would people pay

In the idea of a wealth tax, or even for properties taxes, many times assets are illiquid. What mechanisms can be introduced to promote compliance and ensure the revenue collection goals of the taxing ...
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Can infrastructure costs be covered by taxes on flat sales/rents?

Instead of describing the general question, let me give a concrete example. Suppose in a city they want to extend a metro line but they don't have enough budget for it. Could the city designate a ...
1 vote
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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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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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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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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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1 answer
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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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1 answer
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Simultaneous consumption tax and subsidy

Suppose the government introduces a simultaneous tax and subsidy on a consumption good, which is produced under perfect competition. If the tax and the subsidy are equal, then there will be no ...
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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}{\...
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1 answer
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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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What kind of tax diagram can show the full consumer tax burden?

If a government increases a purchase tax on an apartment, the tax will be fully burdened by the consumer, as the "producer" will simply be the owner of the house. But in a diagram, should ...
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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 ...
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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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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. ...
1 vote
1 answer
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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 ...
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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!
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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 ...
16 votes
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. ...
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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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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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1 answer
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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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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 ...
1 vote
3 answers
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Could a carbon tax be a substitute for VAT?

VAT is a tax on consumption. However, while in some instances it taxes negative externalities (e.g. fossil energy consumption) in many other cases it taxes services without externalities or ...
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What percentage pass-through effect do VAT taxes have?

From what I can find on Google Scholar it looks like there is a pass-through effect of approximately 1/3 the amount of a Value Added Tax - with the exception of food production, which trends higher - ...
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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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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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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 ...
2 votes
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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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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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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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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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3 answers
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What is the difference between VAT and corporate tax

Many times I hear that VAT (value added tax) is a "good" tax, while corporate tax is a "bad" tax/ However, both taxes take a cut from the difference between the income of a company and its expenses, ...
4 votes
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Who really pays transaction taxes like VAT or sales tax?

In Europe, shop prices are typically displayed including VAT. This gives the impression that the seller is paying the VAT. They have to offer a competitive price, then a percentage of that is taken ...
3 votes
3 answers
378 views

Why are there estate taxes after the owner passes away?

Isn't it unfair for estates to be taxed after death? The person who bequeathed the estate probably purchased it with after tax money, so wouldn't it then be taxed twice? What is the purpose of the tax ...
2 votes
2 answers
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How effective is progressive tax at regulating monopoly?

I presume that if a company misuses its dominant position, it should be ultimately reflected in unusually high profits. That suggests that a progressive tax could decrease the incentive to charge ...
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1 answer
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VAT vs. Income tax - How their effect varies

Was wondering how the effect of VAT (indirect taxes) differs from the effect of income tax (direct taxes), in terms of their impact on the 4 marco objectives (unemployment, inflation, balance of ...
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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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Equality, Taxes & Business Growth

First, I'm not an economist - just a regular Joe interested in a small part of the subject. Second, I apologize if this is a better question for the 'politics' stack exchange, but I figured I might ...
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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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Externalities, Pigouvian Taxes and Wikipedia

It states on Wikipedia: A Pigovian tax (also called Pigouvian tax, after economist Arthur C. Pigou) is a tax imposed that is equal in value to the negative externality. The result is that the ...
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Are sales taxes regressive?

There are competing definitions of regressive taxes out there: On Wikipedia: A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation ...
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What at all justifies income taxes (as opposed to sales taxes only)?

For those who do not know, in America, the higher your income, the higher the percent of it is spent on taxes. This means that, whatever tax money is used for, those who are more hardworking (or, at ...
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Taxes levied on sellers = Taxes levied on buyers

All page numbers refer to Principles of Microeconomics, 7 Ed, 2014, by NG Mankiw. [p 125:] Taxes levied on sellers and taxes levied on buyers are equivalent. [p 156:] ... When a tax is levied on ...
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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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