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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24
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4answers
8k views

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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2answers
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Why is capital income taxed differently than wage income?

Why is income from capital gains taxed differently than wage income? There are perhaps historical, practical, and theoretical reasons. What are they? (As far as historical reason go, I'm asking ...
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7answers
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Economic policies to decrease obesity (would they be effective?)

According to the Center for Disease Control and Prevention, approximately 35% of adults in the United States are obese. I have done much research on the topic of economic policies to reduce obesity (I ...
12
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6answers
688 views

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 ...
11
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2answers
196 views

Optimality of Zero Capital Taxation

The Chamley-Judd result of zero optimal capital taxation says that 0 capital taxation are required in order to maximize welfare at the steady state. The result is 30 years old. Still assuming that ...
10
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1answer
317 views

Straub and Werning, 2014, on zero capital taxation

This is a test balloon to see whether these kinds of questions are appreciated/welcome on Econ.SE: I had a hard time grasping Straub and Werning (2014) (no paywall). I understand the general ...
8
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2answers
202 views

Do welfare payments for children incentivise having children?

A common argument against safety net social welfare for people with children is that it can incentivise people without better options to have children. This could be considered a problem if it means ...
7
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2answers
319 views

Lee and Saez (2012): Pareto-Improvement?

I'm interested in the following quote that came up in this earlier answer. Second, when labor supply responses are along the extensive margin only, which is the empirically relevant case, the co-...
7
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4answers
979 views

How is Singapore able to provide first-world public services, given its low income tax rate?

Singapore has a relatively low personal income tax rate. Somebody who earns $80,000 after deductions only pay 3,350 in taxes, or about 4% effective rate (see 2012-2016 tax table). 80,000 is already ...
7
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1answer
2k views

What are the pros and cons of eliminating corporate taxes?

I recently heard a story on npr about economic policy changes that both liberal and conservative economists definitively agree on. Among other things, complete elimination of corporate taxes was ...
7
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2answers
552 views

Could a Cap-and-Trade and a Carbon Tax both work together as a system to reduce carbon emissions?

For example, the European Union currently has a Carbon Emissions Trading Scheme in progress the ETS which acts to cap the amount of carbon dioxide released by large corporations. However, let us ...
6
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1answer
1k views

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 ...
6
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3answers
622 views

How does lowering a corporate tax rate benefit a nation?

When governments talk about about lowering corporate tax rates they claim there is benefit in one form or another. The problem is the mechanism of how the benefit can work is never explained. The ...
6
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1answer
88 views

Policy relevance of the optimal taxation given uncertainty about social welfare specification

One common criticism in the optimal taxation literature is the specification of the social welfare function. The optimal taxation literature (I have the Mirrlees framework in mind) relies on first ...
6
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3answers
426 views

What are the arguments against a zero corporate tax? [duplicate]

I've read a title in the news proposing a zero corporate tax. Thinking about it I couldn't figure a good reason against. Why couldn't a country just set the corporate tax rate for firms to zero and ...
6
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1answer
52 views

What is was the total corporate Income earned in the United States in 2014?

What is was the total corporate income earned in the United States in 2014? The question may seem simple, but I have been looking for a reliable source to inform me of this figure, and I hope someone ...
5
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192 views

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. ...
5
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3answers
155 views

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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3answers
3k views

How are shell companies used for tax evasion?

The recent release of leaked documents on Mossack Fonseca has information on corporations and individuals using the firm's services for, among other things, tax evasion: The massive security breach ...
5
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3answers
508 views

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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198 views

Arguments against inheritance tax

One of the arguments against inheritance tax is that it lowers the incentive to work for those close to retirement who have earnt enough money to be comfortable in old age. How much is this offset ...
4
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3answers
3k views

Is my logic on taxation for this question legit?

At Fenway Park, home of the Boston Red Sox, seating is limited to 39,000. Hence, the number of tickets issued is fixed at that figure. Seeing a golden opportunity to raise revenue, the City of Boston ...
4
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4answers
264 views

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 ...
4
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3answers
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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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3answers
339 views

What would be the economic impact of the “fair tax” plan?

So I read about an interesting proposal about completely replacing income tax with a heavy national sales tax of about 30% (23% inclusive to compare to income tax). I was thinking about what the ...
4
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1answer
101 views

Are there economic policies that help countries fight corruption?

Are there particular taxes or subsidies or public goods that a country's economic authority could implement to help in the fight against corruption? While the rule of law seems to be the first order ...
4
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2answers
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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
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1answer
260 views

How to determine regressive tax

I have a mock-up exam that my teacher gave me and one of the questions was the following: Given these four graphs, which one represents regressive tax? I'm quite sure it's graph A, but I don't ...
4
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1answer
60 views

Has any country attempted to inflation adjust capital gains before taxation?

Inspired by the answer to a different question I wondered: Can anyone think of a case study example, past or present, when capital gains are inflating adjusted before being taxed. I could imagine ...
4
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2answers
300 views

Is information technology going to turn most “common goods” into private goods?

Common goods, (not public) are so because they are non-excludable and rival. Often this reflects the impracticality of excluding some users, rather than an absolute impossibility. For example, a park ...
4
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1answer
66 views

Do tax cuts to the rich lower interest rates?

The rationale for giving tax cuts to the income brackets is that this money is then invested in new businesses which increases jobs. If the saved money is being saved/invested instead of being spent,...
4
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1answer
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Price Producers Receive as a Result of Indirect Taxes

In my economics class, we were introduced to the idea that if the government imposes an indirect tax on a good, the price consumers have to pay increases, but along with this increase in price for ...
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0answers
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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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How did “excess liquidity” in the US contribute to the 2008 crash?

Here I'm using "excess liquidity" not in reference to monetary policy, but to the concentration of capital at the top in regard to private citizens. This excess liquidity, for which the tax cuts in ...
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4answers
469 views

If Trickle Down Economics Works, Then Shouldn't “Trickle Up” Economics Work as Well?

A lot of controversy in economics on the political stage comes from trickle down economics and whether it even works or not. The idea is that if we give sufficient tax cuts to corporations, they'll ...
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2answers
356 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 ...
3
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2answers
290 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 ...
3
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2answers
884 views

Laffer Curve Regression

I am doing some research on a potential U.S. Nationwide Sales tax. I found per-capita sales tax revenues and sales tax rates for each of the 50 states and conducted a quadratic regression on them. I ...
3
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2answers
82 views

Derivation on p.99 of Salanie, The Economics of Taxation (2nd edition)

Starting on p. 98 of Salanie's "The Economic of Taxation" (2nd edition), it explains To probe it more rigorously, let us define the utility of taxpayer $w$ when he claims to have productivity $w'$: ...
3
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1answer
110 views

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 ...
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2answers
77 views

Why is the Supply of Labour More Elastic in a Single Province/State then it is in the Country as a Whole?

Apparently, the federal government has a greater ability than provincial government to increase tax revenues by raising tax rates because the supply of labour is more elastic in a single province than ...
3
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1answer
73 views

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 ...
3
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3answers
346 views

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 ...
3
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1answer
314 views

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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2answers
636 views

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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2answers
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Effect of property tax on rent

Suppose the government puts a tax on all apartment owners (e.g. a certain percentage of the apartment value), whether or not the apartment is rented. Will this tax cause an increase in rent? From an ...
3
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1answer
102 views

How does corporate income tax apply?

I am very confused regarding the corporate income tax. Please explain me the following scenario: "Teddy Bears Company" buys stocks of 1000 euro (VAT added). Then, in 1 month sells everything with ...
3
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1answer
23 views

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 ...
3
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1answer
267 views

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 ...
3
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1answer
59 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 ...