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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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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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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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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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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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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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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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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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 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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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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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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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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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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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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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 ...
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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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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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Would taxing money owned (as a share of purchasing power) be a better form of taxation?

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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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 ...