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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 found, the possible complexity of negotiating a "fair" transaction (eg I'll do your electrical job if you'll clean my windows monthly for the next 3 months). I don'...


15

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 an implicit trade of cash along with the trade of goods. Since I am not going to give tax advice to random strangers on the internet, please consult the tax laws ...


11

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 up in value at the same rate as inflation, about 3.5% a year. After 20 years, it's worth about \$160, but \$160 has the same value now as \$80 did when I ...


9

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 that we need to consider the rate of convergence to the steady state. Also, there is other literature that gives some competing results (e.g., "the new ...


8

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 what makes you fat, not fat itself. It has been known for a while, at least since the professional sports were invented. Yet the lobby of the enormous sugar ...


8

I'm not an expert on this, but as a Singaporean, here are some factors off the top of my head (plus some Googling), explaining why Singapore is different from other first-world countries (in terms of revenue and expenditures). In 2014, the personal income tax contributed only about 14.6% of government revenues (Source). In contrast, in Canada for example, ...


7

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 of the corporate income tax): "...that it’s as if people think that if the government imposed a tax on cows, the tax would be paid by the cows." Are ...


7

"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. The "value of work" is certainly not increased. And the important question is, does this increased nominal income lead to higher consumption? Consider a ...


7

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 to assess the impact on person being taxed. Without considering income the above definition becomes moot. Sure the tax is proportional (fixed share of tax on ...


7

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 that the tax effectively increases the price demanders pay and decreases the price suppliers get. Elasticity tells us how demanders and suppliers react to this ...


6

(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 from a decline in the minimum wage for low-skilled workers. Longer answer: Suppose that I'm the government, and I decide to lower the minimum wage $\bar{w}$. The ...


6

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-capital tax rate" does not hold: Aiyagari(1995) presents a model with heterogeneous agents, incomplete insurance markets and borrowing constraints (i.e. a "...


6

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 account all sorts of taxes like taxes on properties, consumption, dividends, etc. the European countries tax their rich residents relatively less than the poor ...


6

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 patterns. For instance, obesity rates are the highest in the United States at 30.0% (as you mentioned), compared to 14.5% in France and 23.6% in the United ...


6

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 be true, but the science behind it is sketchy, at best. As several others have pointed out, obesity is not well-understood, medically, and it is entirely ...


6

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 of Management at Cornell University summarized the findings of years of research about the effectiveness of applications of this theory. In his article, he ...


6

It's called seigniorage. This actually goes on to some degree in every country. I don't think any country has ever relied solely on this to cover all its expenses. (Those that come close usually suffer from hyperinflation.) Briefly googling I found this old graph (source). With more work you can probably find more up-to-date figures. Note that although the ...


6

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 crossed over the bracket threshold by £1, the marginal rate would be huge, as the whole purchase price was taxed in the higher rate. Hence the clustering. That's ...


6

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 hardworking (or, at least, those who are more skilled) are essentially punished.... We should be careful making statements like this for a couple of reasons. First,...


6

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 track who produces the carbon in the economy. Especially on industrial level in developed countries. The reason 1 could be problem in some developing countries ...


5

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 wikipedia article can be consulted). Even in the simplest econometric study, one has to make sure that what one does is consistent with the theory one wants to ...


5

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 doubled. However, the cap on emissions would weaken the effect of gradual escalation of the tax rate. The model represented in the following diagram is a ...


5

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. Under this interpretation, the policy recommendation are relevant despite depending on the specification of the SWF, precisely because different decision makers ...


5

The reason is that at the same time the wage of the high-skilled increases. By reducing the minimum wage, the number of people working in the low-skilled sector increases (involuntary unemployment is reduced) which leads to an increase in the wage of the high-skilled. The corresponding proposition in the paper is Proposition 3, the argument of which is ...


5

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 but not completely so, so the incidence will fall on property owners. In the long run, a property tax will increase rental costs because supply of new units (i....


5

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 tax, individuals would prefer real estate over other assets, creating a distortion in the asset price market. For a recent contribution to optimal inheritance ...


5

It may seem unfair that someone who has already met their tax obligations gets hit with another one after they die. From an economic standpoint, it is very popular. I'll let this economist article explain it... The gut dislike of death duties seems to arise because the tax clashes with heartfelt dynastic instincts Any tax on capital will tend to ...


5

The current answers correctly point out that financing the government via the printing press would generate inflation. Since inflation is bad, this would be a bad policy. However, these answers miss out on several advantages of an inflation tax. Firstly, there would be substantial productivity gains since the entire government revenue system, tax advisors, ...


5

I think you're confusing quantity demanded, and the demand curve. The demand curve tells you how much quantity should be demanded at each price point. Therefore changes in price should change the quantity demanded, not shift the curve. You want to think of this in terms of demand and supply shocks. For example: Imagine it was discovered that bananas gave ...


5

Because they are high in comparison. Take a look at the data from the OECD here, for 2015. I have plotted them below: (The red is the personal income tax set by law, and the blue is the one adding tax credits, as far as I understand). As you can see, rates in Canada are quite high in comparison with other OECD countries like Estonia or Poland, and also ...


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