23 votes
Accepted

Why is bartering uncommon in modern countries?

The main likely reasons why barter is not more common are: The inconvenience of having to find another party who both offers what you want and wants what you offer. Even if such a party can be ...
  • 7,553
20 votes

Why aren't we seeing carbon taxes in practice?

I think it’s mainly politics. For example, when France tried to implement increases in tax on oil (indirect way of taxing carbon) it led to yellow jacket protest. As you pointed out it’s easy to ...
  • 47.1k
17 votes

Why is bartering uncommon in modern countries?

In the countries that I am familiar with (such as Canada), using barter to avoid taxes is definitely illegal. You are required to report the dollar value of the exchange as revenue. It is treated as ...
15 votes

Why aren't we seeing carbon taxes in practice?

It seems that there are many advantages to carbon taxes, including pricing in the environmental cost and generating revenue (that could offset other taxes). So why are we not seeing them in practice, ...
  • 309
11 votes

Why is capital income taxed differently than wage income?

One reason is the inflationary gain problem. Let me give an example with simple numbers. I make \$100 in income and pay 20% tax of \$20. I have \$80 left, which I invest in a stock. The stock goes ...
  • 1,162
9 votes
Accepted

Optimality of Zero Capital Taxation

There is quite a bit of work being done in that area. One very recent example is Straub and Werning's working paper "Positive Long Run Capital Taxation: Chamley-Juff Revisited." The point seems to be ...
  • 9,235
9 votes

Why aren't we seeing carbon taxes in practice?

Just to build up on @1muflon1's (+1) answer: I'd also add the "axe the tax" campaign in British Columbia back in 2008. The carbon tax there is (or at least was) considered a model example of how to ...
8 votes

What are the pros and cons of eliminating corporate taxes?

The first and most important insight here is to recognize that burden of taxation (the incidence) need not fall on the entity taxed. Economist Herb Stein is famous for having quipped (on the subject ...
  • 16.1k
8 votes
Accepted

Economic policies to decrease obesity (would they be effective?)

Yes, sugar tax! This is probably as controversial as tobacco tax was back in the days. If you walk through a supermarket, you will find that half of the food section is food full of sugar. Sugar is ...
8 votes

Why can't the Land-Value Tax (in some cases) be passed on to tenants?

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 more people want to live in a particular place, rents ...
  • 1,162
8 votes
Accepted

Are spectrum auctions a tax?

Suppose you write some software that you can then freely sell at practically no cost per unit (the wonders of the internet). You want to make as much profit as possible. Since you have almost no per ...
7 votes

What are taxes for since law forbids printing of money?

"Why I don't hear nobody speaking about such idea?" Because historical experience says it won't work. By printing money instead of collecting taxes, what increases is the nominal disposable income....
7 votes
Accepted

Are sales taxes regressive?

It depends on the definition you want to use. You can define a regressive tax as the wiki says, in which case a sale tax would not match. But the goal of definition of different class of taxation is ...
7 votes

Is my logic on taxation for this question legit?

The burden of taxation is shared among suppliers and demanders according to the price elasticities of supply and demand. The more elastic side carries less of the tax burden. To understand this, note ...
  • 5,684
7 votes
Accepted

Why do we use tax brackets?

I think you've misunderstood how the (UK) income tax brackets work. They work differently to how stamp duty used to work. Stamp duty brackets used to be absolute rates: so when the purchase price ...
  • 8,083
6 votes
Accepted

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

The combination of the two policies could work and would have some advantages over either alone, and for a given reduction in emissions the overall cost burden on industry and consumers would not be ...
  • 7,553
6 votes

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

Here is an answer based on the following interpretation of the SWF : there is no "true" SWF, but SWFs are observable in principle, they simply represent the preferences of the policy decision maker. ...
6 votes

Optimality of Zero Capital Taxation

Ljungqvist and Sargent (2004). Recursive macroeconomic theory 2n ed. (ch. 15) present and review the issue. In the Concluding Remarks section, they mention two environments, where the "zero-optimal-...
6 votes
Accepted

Lee and Saez (2012): Pareto-Improvement?

(Note that this answer implicitly makes reference to the specific model in Lee and Saez.) Short answer: the increased taxes on high-skilled workers exactly offset the higher real wages they obtain ...
6 votes
Accepted

Effect of property tax on rent

A property tax: In the short run, a property tax will have no effect on rent, as the supply of homes is fixed (i.e., supply is totally inelastic in the short run), and demand is relatively inelastic ...
6 votes

Why is it said that Sweden has a regressive income tax system?

Excellent question. You can understand this by reading the original study referred in the article. I will try to provide a short explanation here. Basically the study argues that if you take into ...
  • 27.6k
6 votes

Why are there estate taxes after the owner passes away?

From an equality of opportunity perspective, it is desirable to have some taxes on inheritance. This levels the playing field for each generation to some extent. If real estates are exempt from such a ...
  • 1,822
6 votes

Economic policies to decrease obesity (would they be effective?)

Pierre Dubois, Rachel Griffith, and Aviv Nevo have a nice and well-executed AER paper where they argue that differences in obesity rates across countries can be due to differences in food consumption ...
  • 6,702
6 votes

Economic policies to decrease obesity (would they be effective?)

In any discussion of obesity-related policy, it helps to call out a couple of assumptions: Assumption: A healthy lifestyle will reduce a person's weight. Everyone and their brother "knows" this to ...
  • 61
6 votes

Does lowering corporate tax rates increase investment or provide some other benefit to a nation?

Cutting corporate taxes is one of the tools of the Trickle-Down Economics (TDE) school of managing economic growth. In a New York Times article in 2012, economist Robert Frank of the Johnson School ...
  • 161
6 votes
Accepted

What at all justifies income taxes (as opposed to sales taxes only)?

There's a fair amount to unpack in the question, so it might be useful to take it step by step, and consider everything from a more abstract, economic theory perspective. ...those who are more ...
  • 1,370
6 votes
Accepted

Is the government putting a 20% tax on dividends equivalent to the government owning 20% of the company?

Is the government putting a 20% tax on dividends equivalent to the government owning 20% of the company? No, stock ownership entitles owner control over decision making in the company (via voting on ...
  • 47.1k
5 votes

Laffer Curve Regression

The Laffer Curve is a theoretical argument that feels strongly true the moment one hears about it. The complexities around it once one wants to have a closer look are many (just for a taste the ...

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