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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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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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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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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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 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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Is there a mathematical relationship between availability of land and real estate prices?

I’ve seen politicians, activists, think tanks etc proposing a (kind of) land value/property tax for ending speculative land hoarding. They say that builders hoard land and create artificial scarcity ...
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Wealth tax and share holdings

Please help me to understand how the hypothetical introduction of wealth tax will affect the markets. In my understanding, many of the super-rich own most of their wealth in shares of their own ...
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Do any UBI Proposals include a Universal Basic Inheritance UBI† Component?

Are there any UBI proposals that include a 'Universal Basic Inheritance' UBI† Component? This could be either a lump sum that is received by citizens when they reach the age of majority, or just ...
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Maximized tax revenue & foreign labor

I'm dealing with a tricky assignment, and I have no idea of where to begin. Person 1 lives in Denmark and has a utility function given by, $$(1) \ \ u(c,l)=c-\frac{\eta}{\eta+1}(24-l)^{\frac{\eta+1}{\...
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Dead Weight Loss (Tax)

Problem Given demand $D(p)=A-ap$, and $A,a>0$ and a fixed price $0<p_1<A/a$ by some company. My solution so far CS is $CS=\int_{p}^{A/a}D(p)dp=\int_{p}^{A/a}(A-ap)dp=\frac{1}{2a}(A-ap)^2=\...
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If protectionist policies hinder economic growth, why do we need border taxes at all?

I understand that free movement of labour and goods are a net positive for economic growth, and protectionist policies, which would make exports and imports harder would not be. But if this is the ...
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Compare taxes Cobb-Douglass and more

Let a utility function for a consumer be defined as $u(x_{1},x_{2})=x_{1}^{1/2} x_{2}^{1/2}$. With the budget $x_{1}p_{1}+x_{2}p_{2}=m$. With values $p_1=p_2=1, m=32$. The state now adds a tax of unit ...
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Externality and Output

In a positive externality, can government just set the price to the socially efficient price instead of a subsidy to correct an externality?
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Introduction of an asset tax in the AK model

Let's start by analyzing the family's problem with the imposition of a tax. Assuming a CRRA utility function: \begin{equation} U = \int_0^\infty e^{-(\rho-n)t} \cdot \left[ \frac{c^{1-\theta}-1}{1-...
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Relationship between tax rate and the yield curve

Suppose that financial market participants now expect a future tax increase in one year. Also assume that the yield curve is initially upward sloping. Given this information, we would expect which of ...
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why does income of executives level out in the long term after tax increases?

Marginal Revolution University has the following question in its Elasticity unit: In 1993, then President Clinton passed a law raising income taxes. This tax hike was fully expected: He campaigned on ...
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Would the market stabilize if companies paid taxes on revenue instead of gross income?

Note: there is a closed question that is similar (https://money.stackexchange.com/questions/126677/paying-taxes-revenue-vs-taxes-profit) but the response offers a perspective that I would like to ...
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How do tax payers have to pay for the tax deductions someone else receives due to a charitable donation?

"A USD 1,000 donation from a donor in the highest tax bracket costs that donor only USD 604. The federal government kicks in the remaining USD 396 in the form of a reduction in taxes", ...
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What is the term for the cannibalization of one tax by another?

The context for the question is a situation where a government-owned lottery pays corporation tax, but an additional betting duty levied on individual gamblers reduces the lottery's profits, thereby ...
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What is the different between a Sales Tax and a Value Added Tax?

The USA has a sales tax which is applied at the point of sale, in states which have a sales tax. During the Democratic Party primaries, one of the candidates, Andrew Yang, proposed moving to a Value ...
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Does a more even distribution of wealth result in lower taxation?

A proportion of government spending is associated with welfare. There are also many factors related to poverty that may result in higher government spending (e.g. poor health, crime, etc.). Does it ...
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If governments can accurately do your taxes for you, why would it overwithhold people's income?

Here's What Would Happen if No One Paid Taxes But don't the majority of people get refunds? And wouldn't that mean it wouldn't be quite so much of a disaster if no one filed? $\color{red}{\text{There ...
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Do governments really need to tax us, when they can create money at will?

I feel a contradiction between Prof. Howard Chernick's answer and Redditor "galivet"'s comment? Who's correct? Chernick has B.A., Johns Hopkins University, Economics, 1969 Ph.D., ...
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What's the economic argument (if any) for taxing dividends as ordinary income?

My (limited) understanding is that dividends and share repurchases are economically very similar: while share repurchases are slightly less direct, both transactions are effectively ways for publicly ...
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How do I solve the Envelope Theorem condition in Microeconomics?

I am preparing myself for a MSc in Economics and don't understand why, according to the Envelope Theorem, when deriving a utility function $ u(θ, q(θ), r(θ)) = B(q-r) - C(\frac{q}{θ})$, its derivative ...
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From MMT viewpoint, how do taxes make sense?

I understand this part of MMT: From 100 USD that the Fed prints, the state can get back (or destroy) 10 - 90 USD back in taxes. But what is the effect of taxes on the economy: A household buys food ...
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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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Deadweight Loss and Excise Taxes

I am currently reading through the 5th Edition of Economics, by Paul Krugman and Robin Wells. Right now I am learning about excise taxes and how their different aspects (government revenue, deadweight ...
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Find Price Elasticity of Demand for p = 0

Given a linear demand curve $q(p) = a - bp$, how would one find the price elasticity of demand at $p = 0$? The quantity that would be demanded is given: $Q_0 = a$ The formula for the price elasticity ...
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Are the EU funds coming from EU citizen's taxes as well?

I was trying to understand how the EU is funded using their official website, but my limited understanding of economy makes it very hard to understand the money pathways from a single unit (the ...
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Is there a standard term for this tradeoff when subsidizing: inducing dependence vs providing support?

I've often heard it informally argued "people will become lazy if you give them handouts". Although I doubt the economic sophistication of most such assertions, I do think they have a real point: you ...
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How much UK income tax is collected from each income tax band?

How much of the 208 billion Income Tax receipts in this 2020 budget policy paper is coming from each of the three (Basic rate, Higher rate & Additional rate) tax bands?
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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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Do carbon taxes in place today apply to carbon embedded in imports?

I’m giving the example of Sweden whose carbon tax is highly regarded and which is the highest in Europe. Source Sweden has a carbon tax of €110 / t. Source This tax does not apply to installations ...
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What would the price of carbon emissions need to be for the EU to achieve its objective to be carbon neutral by 2050?

The EU committed to net zero green house emissions by 2050. (Source) It is regularly said that the a carbon tax of USD 40-80 / t CO2e (USD 50-100 by 2030) would be sufficient to reach the Paris ...
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UK Government Coronavirus Job Retention Scheme Funding

During the Covid-19 outbreak the UK government is offering to pay upto 80% or a max of £2500 per month to prevent employers laying off workers; Furloughed workers If you and your employer both ...
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Why does a tariff have no effect to an exporter?

I'm reading Principles of Economics, the paragraph about tariffs in a imaginary country Isoland wrote: "The Isolandian economists next consider the effects of a tariff—a tax on imported goods. The ...
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Taxes on Family leave pay

I don't know if this is the correct forum for this question, but do we have to pay taxes on checks from the government that were paid from taxes in the first place. For example, like Social security ...
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Is there an “ideal” ratio of tax revenue to GDP? Or, at least, can I assume a higher ratio is better?

At the link below, you can see countries have a huge difference in ratios of tax revenue to GDP. Is it fair to assume that a higher ratio is better? Does raising a substantial portion of your GDP in ...
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What is the difference between HM Treasury and HM Exchequer?

Both terms refer to collecting tax revenue, right? What's the difference then? I hoped the relevant Wiki pages would help but they didn't.
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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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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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