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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320 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 ...
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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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63 views

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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436 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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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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1answer
72 views

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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31 views

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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63 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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514 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
80 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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625 views

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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835 views

Difference between pigovian tax and sin tax?

Could they be interchangeably used? Or, is one subset of the other?
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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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2answers
73 views

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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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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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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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 ...
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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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136 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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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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What would be the effect on a tax on business cash flow instead of on income?

This came up in a pub discussion. (yes, it was good beer...) Suppose that instead of taxing companies on the net income they make, they were taxed at a much lower rate on cash flow, with no ...
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104 views

How effective is progressive tax at regulating monopoly?

Regardless of the morality of progressive taxes, the economical benefit of progressive tax is at least debatable. But could a highly progressive tax replace at least some of the american/european anti-...
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Are there any economic reasons that could justify a higher tax rate on housing repairs than on construction of new houses?

In the UK, a builder constructing a new home need not add tax to the price charged, but a builder undertaking repairs or renovations to an existing home must add value added tax (VAT, currently 20%). ...
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Is printing money to pay government expenses regressive or progressive taxation?

Lets say that the government decides to pay some of its expenses by printing money*. This (according to some schools of thought) effectively increases the inflation rate and devalues the value of the ...
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Could a tax on rental income that depends on price per square meter induce more housing with lower rents?

The background of this question is: In Germany rental income is generally taxed the same as regular business income. In some cities, there seem to be housing shortages across different incomes. Are ...
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Which income dollar is taxed most heavily, including implicit taxation, in USA?

Income is often taxed implicitly by disqualifying deduction or government assistance. For example, if the recent proposal of "free tuition for kids of families making under \$125k" would pass the \$...
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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. ...
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272 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 ...
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Why does everything get more expensive as cities grow in density/size?

I have long wondered why groceries, rent, and especially cially taxes increase as cities get larger since the cost per capita goes down, at least according to everything I've read including a summary ...
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Why do we model that higher government involvement increases output?

I have just read about the "real intertemporal" model of a macroeconomy in Macroeconomics by Stephen Williamson. I am concerned about how it says any increase in government spending, even if it is ...
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UK: Is there a list published by the government for the amount of tax paid by companies?

I know of the website for data.gov which provides data but is a publicly available list of taxes paid by publicly own corporations like Apple? If not how do we know how much is paid by them?
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Microeconomic Q on Total Revenue for Producer after Excise Tax [closed]

I had a question on how an excise tax per unit of good produced for a producer would affect total revenue for a producer of that good. The graph is that supply is perfectly elastic (horizontal) and ...
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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 Reform. In the proposal they suggest that All Taxes and Duties of Central ,State and Local body Government ...
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Falling oil prices but no benefits passed on to the end user; government's strategy

Even though the oil prices have fallen rapidly in the recent years, the cost of petroleum products hasn't gone down in India. Apart from raising more revenue, what are the other benefits the ...
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Why can't direct taxes be passed on to the consumer? [duplicate]

What stops firms increasing prices of goods in the case of an increase of a direct tax such as corporation tax?
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:History: Industry threatening to leave if social change takes effect

With growing inequalities and salary gap, left-wing politicians are asking for social reforms in some countries (I am thinking of France). Social reform include: equal pay for women, maternity leave,...
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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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Why is corporation tax regarded as a direct tax?

I understand that the classification of taxes is on ability-to-pay principle and is partly determined by the demand elasticity of the commodity or service. That's how I understand income tax is ...
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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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Could the upper quintile pay the annual federal personal income tax for all other quintiles from their annual income?

I am wondering if, in theory, the upper quintile (20% of earners in the U.S.) could pay the annual federal tax bill for all quintiles from their annual income? I have been looking at 2013 CBO data ...