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2 votes

Taxation and Labour Supply in the short-term

From the graph, we see that labour supply is perfectly inelastic, while labour demand has a (negative as usual) non-zero elasticity. When only one of the parties is perfectly inelastic, they perceive ...
Nicolas Torres's user avatar
2 votes

Would it work? A tax that automatically toggles on-off

It is very difficult to say what the state of the economy is at at a given point in time so it is difficult to create conditions that would serve as an on/off switch for a certain tax. There are what ...
LlamaBricks's user avatar
2 votes

Who bears the burden of a land value tax over the long-term?

Who bears the burden of a land value tax over the long-term? Tax burden is determined by relative elasticity of supply & demand. The tax burden generally falls mostly on the side that is less ...
1muflon1's user avatar
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2 votes
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MMT suggests that taxation can be used to fight inflation. What would be an argument against this suggestion?

The standard economics story, as I understand it, is that deficit spending increases inflation because it is increasing demand chasing limited supply. Yes this is more or less correct. In standard ...
1muflon1's user avatar
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1 vote
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Who bears the burden of a land value tax over the long-term?

The burden of a land value tax falls, as you say, on those who are landowners at the time the tax is introduced. A key to this question is to recognise that for land, as for many capital assets, there ...
Adam Bailey's user avatar
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1 vote
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Is Printing Money a Form of Hidden Taxation?

Is Printing Money a Form of Hidden Taxation? In modern economy most new money is created electronically. Also due to elasticity of money supply not all money is high powered money (i.e. money created ...
1muflon1's user avatar
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1 vote
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Microeconomics question: Find consumer optimal choice after tax

The way I would set up the budget constraint is as follows: $$p_c c = (1-t_f)p_f(E-f)$$ where $t_f$ is the tax rate on food and $E$ is the endowment. The motivation is, the more of an endowment is ...
1muflon1's user avatar
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1 vote

Would it work? A tax that automatically toggles on-off

Could we create a tax that automatically toggles on or off depending on the state of the economy taking into consideration that the revenues would be saved for further use, either to stimulate the ...
1muflon1's user avatar
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1 vote
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Interest rates vs consumption tax brackets

There are several problems with your proposal, and there are several claims that you make that are actually not correct. First, consumption taxes do not directly combat inflation they actually ...
1muflon1's user avatar
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1 vote

tax imposition on supply and demand curve

If you have taxes, it is important to distinguish between the price that consumers pay $p_D$ and the price that producers receive $p_S$. Assume that the demand curve and the supply curve are linear, ...
tdm's user avatar
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1 vote
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tax imposition on supply and demand curve

Let $p_d$ be the consumer price and let $p_s$ be the producer price. If there is a specific tax $t$ on consumption, then a consumer pays $t$ on top of the producer price $p_s$, so that $p_d=p_s+t$. ...
smcc's user avatar
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1 vote

How can consumption taxes be made progressive?

I can think of only two ways: A. Tax consumption that hits the rich more B. Keep track of people's income, and give them some kind of tax rebate for a limited exemption of consumption taxes. But why ...
Governology's user avatar
1 vote

What percentage pass-through effect do VAT taxes have?

There is no one percentage. It would depend on the dynamics of the market for each particular good. At any given time, there would be an average percentage passed through, but this would probably be ...
Governology's user avatar
1 vote

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

As I'm sure you're aware, sales tax is regressive, and income tax is at least intended to be progressive. This is viewed as basically a mechanism to transfer wealth from the rich to the poor. Some ...
Governology's user avatar
1 vote

Who really pays transaction taxes like VAT or sales tax?

The primary difference between VAT and sales tax is not whether the buyer or seller pay the taxes. Rather, the primary difference is that sales tax basically repeat-taxes every step of the production ...
Governology's user avatar
1 vote

VAT vs. Income tax - How their effect varies

VAT has deadweight losses caused by higher prices. Income tax has deadweight losses caused by lower take-home wages (which shifts the demand curve down). Both cause fewer transactions (which is where ...
Governology's user avatar
1 vote

Taxes levied on sellers = Taxes levied on buyers

The intuition is that there is only one price in a transaction. The tax acts upon that price. Its a fiction that the tax is "paid by" either party individually. The tax is paid out of the ...
Governology's user avatar

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