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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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Economics of disparity in wages and in 'financial quality of life'

I am seeking a quantitavely and logically satisfying answer to the question I will outline below. It could be in a form of a book/article reference and ideally have as little ideological bias as ...
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Obtaining optimal tax rate [closed]

In an economy with total output Y there are two consumption goods: a privately funded one, denoted by C, and a publicly funded one, denoted by G. Income is taxed at a linear tax rate of r, and hence G=...
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Is Universal Basic Income compatible with free international trade?

If one country introduces UBI, what prevents other countries from taking advantage of that and supplying cheaper (no need to finance a UBI scheme!) goods to the original country and outcompeting the ...
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Does GST/VAT taxation reduce offshore corporate tax avoidance?

So large tech companies are known for having some side 'off shore' company in a 0% tax country (like, but not exclusively, The Bahamas), which charges royalties at approximately the same amount, as ...
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Optimal Tax Rates on BGP

I was going through this paper by Aghion et al. I wanted some clarification on some of the computations. I understood the process uptil the normalization on page 22. Then we can get some policy rules ...
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Can a government invest in public companies so their dividends can finance the government

Is it possible that a country could use the money in its sovereign wealth fund to invest in different country's Stock Market and use the dividends to finance its government thus increasing spending ...
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Market price, output that maximize the price and level of firm profit after applying a license fee

I'm currently working on a problem that says the following : At first we had a number N of firms in perfectly competitive industry,the exercice gives us the total cost and the Market Demand with p as ...
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73 views

Would this alternative monetary and tax system work?

Consider a nation whose money is entirely digital (like Bitcoin), but centralized (unlike Bitcoin). Furthermore, the total money supply is fixed, i.e. money cannot be created nor destroyed. To be ...
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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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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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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, ...
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Why doesn't land value go to 0 when tax rate goes to 100%?

I'm looking at this equation here: $$y = \frac{ra}{r+x}$$ Where: $y$ = market value of land $r$ = real interest rate, set at 0.01 $a$ = land value, set at 1 $x$ = tax rate I don't really ...
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Why do higher real interest rates increase land value?

I'm using this equation to calculate market value of land based on the levied land value tax: y = market land value x = land value tax r = real interest rate a = real time-independent land value i = ...
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How much to earn to break-even throughout life [closed]

Firstly, my apologies if this isn't the right forum for this - I couldn't spot a better one! We are all born, pay taxes and die. Depending on where we live, those taxes will (hopefully) be used to ...
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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 ...
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Wasn't Laffer Wrong?

The Laffer curve merely describes the relationship between tax rate and tax revenue. It assumes that workers are most motivated to make money when the rate is 0%. It also assumes that as the rate ...
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Why use marginal rather than average tax rates in incentive analysis?

Why do tax analysts worry about marginal tax rates, not average effective rates, in looking for incentive effects of taxes
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Is there an intuitive explanation for the tax incidence formula from elasticity?

You're probably familiar with the formula for tax incidence (in a standard Principles framework) from elasticity. Specifically, that the consumer share is $$\frac{\varepsilon_S}{\varepsilon_S+|\...
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Tax system is progressive or regressive

Let´s discuss a little! When the direct effect of a tax or transfer policy (compared to what would happen in the absence of the policy) is a reduction in inequality, it is called progressive policy. ...
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1answer
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What is the definition of distributionally neutral tax?

On the website https://www.core-econ.org/ in the book provided, there is an exercise 19.10. It asks whether poll tax is progressive, regressive or distributionally neutral. To answer this question of ...
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How inflationary is progressive taxation?

Compared with, say minimum wage increases, how inflationary is progressive taxation?
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How important is “second best optimum” for the modelling and formulation of policy advice?

The standard formulation of second best theory is: if there is introduced into a general equilibrium system a constraint which prevents the attainment of one of the Paretian conditions, the ...
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2answers
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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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Can a spending freeze solve the problem of the Italian enormous government debt?

In view of the upcoming Italian general election, I've been reading the program of a party (please let me know in the comments whether I can/should mention its name), and in a section of it they ...
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Utility and consumption tax

If I have a model with taxes on consumption denoted $\tau$ should I write the utility function as $u(c)$ or $u((1-\tau)c)$? Thanks
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1answer
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Aggregating in a Continuum

I am working with the following Economic model of labour and consumption decisions: I have a population whose mass is normalized to one of consumers. They derive utility from consumption $c$,...
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212 views

The United States' position on the Laffer Curve

According to a 2012 IGM panel (cf. reference below), most experts believe that a federal income tax cut would lead to a higher GDP in five years, ceteris paribus. Is this effect purely Keynesian, and ...
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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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Quantity supplied & demanded equation with tax

Here's the simple question I can't get my head around :( QD= 120-P QS= 2P-10 Tax= 25 euro per unit How much does the government receive?
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Are taxes supposed to be calculated depending on the seller, or the buyer?

We have a client that aims to ship his product internationally. (I think right now it mostly aims to be US and Canada, but the system would be open to people from all over the world to be bought) ...
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If US capital income taxation were eliminated, which ordinary income tax brackets would be equally progressive?

This question only considers federal taxes in the United States. Also, by "capital income" I am including dividends, interest, capital gains, corporate incomes and estates. The Chamley-Judd result ...
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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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1answer
56 views

The relationship between gross profit and tax

I tried to do following question but I am not sure about my solution. Please tell me your opinions Since gross profit is strictly concave, I can say that $R’’(y)-C’’(y) <0$ Now I maximize the ...
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342 views

Meaning of Transversality Conditions in Ramsey Problem

I'm working on a Ramsey problem for taxation, and am a little confused on the meaning/intuition behind the transversality conditions below: $\lim_{T \to \infty} \lambda_T b_{T+1} = 0$ $\lim_{T \to ...
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When people talk about “Companies Hiding Money Overseas” to avoid taxes, what does this really mean?

Presuming the consequence is holding cash somewhere else: I'm really interested in the objective effect of this from a global value creation perspective. I'm less interested in the money itself and ...
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1answer
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Effect of government debt on tax rates?

Is there any well known study that links government debt to tax rates? I have been searching the literature for some time now and haven't found any. More importantly, could government debt track tax ...
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1answer
44 views

Which one is most distortive?

Income tax, Poll tax, Land tax, or VAT? Georgist argue for land taxes. I think jizya is a form of poll tax. VAT? I don't know. I don't like income tax but can't really articulate why it's so bad. ...
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How did the Joint Committee on Taxation calculate the distribution of individual income tax rate increases for the Tax Cuts and Jobs Act of 2017

According to the Joint Committee on Taxation's JCX-68-17 Distributional Effects Of The Conference Agreement For H.R.1, The "Tax Cuts And Jobs Act", there will be a significant increase in income tax ...
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1answer
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How does price-elasticity of supply affect the incidence of tax on consumer and producer

From what I've read only price-elasticity of demand (PED) (not price-elasticity of supply (PES)) affects the burden of tax on the consumer/producer. However, my graphs suggest PES does affect it. Why ...
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Incentive differences payroll and income tax

Do payroll and income tax create different incentives? Is there any difference at all economically speaking? I suppose different tax deductions and tax rates may or may not apply. If so, what ...
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1answer
535 views

Difference between pigovian tax and sin tax?

Could they be interchangeably used? Or, is one subset of the other?
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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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Taxing a monopoly

can someone explain me why in some books the Demand and marginal revenue moves and but in other books is the marginal cost that moves. Is this like taxing the demand vs taxing the supply? so the ...
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What is this graph saying?

This is from: https://eml.berkeley.edu//~dromer/papers/RomerandRomer.pdf What does it mean that we are looking at a "tax increase of 1 % of GDP". What does a tax increase have to do with the GDP? If ...
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Which model produces the correct revenue-maximizing rate?

Model 1: The tax rate $\tau$ which maximizes tax revenue equals $\frac{1}{1 + a\epsilon}$ where $\epsilon$ is the elasticity of how taxable income responds to changes in the tax rate across and $a$ ...
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2answers
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Monopoly and Taxes (Nicholson Exercise)

Hello I'm working through Microeconomic Theory : Basic Principles and Extensions of Nicholson and Snyder 10e, for an exam and I fail to get how to answer this question (p.517) : A specific tax is a ...
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4answers
370 views

What are taxes for since law forbids printing of money?

This question bothers me for a long time: why government keeps up with the taxes instead of with printing money? This would decrease its operating costs, simplify law and generally raise comfort of ...
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4answers
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Why is bartering uncommon in modern countries?

Recently, I witnessed two acquaintances of mine engaging in bartering, where one traded his services for the services of the other. Both services had about the same value. By trading them directly, ...
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3answers
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How can a country ensure its national currency is used by its citizens?

I am wondering how countries are able to force everyone to use its own currency, instead of some external currency (like the U.S. dollar or Bitcoin or cookies or something else not under government ...
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Why some companies are reporting loss due to the new US tax law?

From http://uk.businessinsider.com/bank-of-america-fourth-quarter-earnings-q4-2018-1?r=US&IR=T: Like the other big banks, Bank of America took a hit from the recently enacted tax law, writing ...