(
课件网) TAXATION AND INCOME DISTRIBUTION Chapter 14 Vocabulary Statutory Incidence Economic Incidence Tax Shifting Partial Equilibrium Models 0 14-* Tax Incidence: General Remarks Only people can bear taxes Functional distribution of income Size distribution of income Both sources and uses of income should be considered Incidence depends on how prices are determined Incidence depends on the disposition of tax revenues Balanced-Budget tax incidence Differential tax incidence Lump-sum tax Absolute tax incidence 14-* Tax Progressiveness Can Be Measured in Several Ways Average tax rate versus marginal tax rate Proportional tax system Progressive tax system Regressive tax system Tax Liabilities under a hypothetical tax system Income Tax Liability Average Tax Rate Marginal Tax Rate $2,000 -$200 -0.10 0.2 3,000 0 0 0.2 5,000 400 0.08 0.2 10,000 1,400 0.14 0.2 30,000 5,400 0.18 0.2 14-* Measuring How Progressive a Tax System Is 14-* Measuring How Progressive a Tax System is – A Numerical Example 14-* Partial Equilibrium Models Models that study only one market and ignore possible spillover effects on other markets Economic incidence depends on: Elasticities of Supply and Demand Tax Salience: the extent to which a tax rate is made prominent to a taxpayer Economic incidence does not depend on whether it is levied on Consumers or Producers. 14-* Before Tax After Tax Consumers Pay Suppliers Receive $1.40 $1.00 $1.20 $1.20 0 D0 S0 D1 S1 Quantity 14-* Unit Tax on Commodities 0 DX S SX DX’ Perfectly Inelastic Supply Quantity 14-* 0 DX S SX DX’ Perfectly Elastic Supply Quantity 14-* Ad Valorem Taxes Pounds of food per year Price per Pound of food Df Sf Q0 Qm Qr P0 Pm Pr Df’ 14-* Taxes on Factors Statutory vs. Economic Incidence The Payroll Tax Tax on labor that finances Social Security Tax on Capital in a Global Economy 14-* The Payroll Tax Hours per year Wage rate per hour DL SL L0 = L1 wg = w0 Pr DL’ wn 14-* Commodity Taxation without Competition Monopoly Despite market power a monopolist is generally made worse off QD does down Price paid by consumers goes up Price received by the monopolist goes down Profits go down Oligopoly Can result in higher or lower profits 14-* Monopoly X per year $ DX MRX ATCX MXX X0 P0 ATC0 a b c d DX’ MRX’ Pn i g f h X1 14-* Economic Profits Economic Profits after unit tax Profits Taxes Economic profit Perfect competition Monopoly Measuring economic profit 14-* Tax Incidence and Capitalization PR = $R0 + $R1/(1 + r) + $R2/(1 + r)2 + … + $RT/(1 + r)T PR' = $(R0 – u0) + $(R1 – u1)/(1 + r) + $(R2 – u2)/(1 + r)2 + … + $(RT – uT)/(1 + r) u0 + u1/(1 + r) + u2/(1 + r)2 + … + uT/(1 + r)T Capitalization: A stream of tax liabilities becomes incorporated into the price of an asset 14-* General Equilibrium Models Show how various markets are interrelated Consider a 2-commodity, 2-factor economy resulting in the following 9 possible ad valorem taxes tKF = a tax on capital us ... ...
