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Thus, the whole tax burden is on landowners and owners of the oil. [5] The other factors that might affect tax incidence are the difference between the short-run and long-run and between open and closed economies. [5] Inelastic supply, elastic demand: the burden is on producers Similar elasticities: burden shared
In the pre-tax equilibrium the distance equals $5.00 x 0.20 = $1.00. This burden of the tax is again shared by the buyer and seller. If the new equilibrium quantity decreases to 85 and the buyer bears a higher proportion of the tax burden (e.g. $0.75), the total amount of tax collected equals $1.00 x 85 = $85.00.
As a result, the distribution of tax burdens and government expenditure benefits is an important economic question to those concerned with the equity of the fiscal system. When the economic incidence of taxation is combined with the economic incidence of government expenditures, the result is a measure of the overall increase or decrease in ...
Opponents believe that, as a diminishing tax, it places too much burden on the low-income earners. When the tax burden is borne by the producers, the French economist Jean-Baptiste Say said: "taxes, over time, cripple production itself" (Say 1880, 447). As some form of taxation is necessary to finance public institutions serving society, such ...
The person who pays the amount of direct tax does not recover all or part of the tax elsewhere. It is in this sense that direct taxation is opposed to indirect taxation. It is the notion of fiscal incidence which allows to analyse who ultimately, weights the burden of a tax, that determines whether the tax is direct or indirect.
The flypaper theory of tax incidence is a pejorative term used by economists to describe the assumption that the burden of a tax, like a fly on flypaper, sticks wherever it first lands. Economists point out several flaws with the assumption: [citation needed] it ignores the elasticity of goods; and
The economic incidence of a tax falls on the party that bears the actual cost of the tax. Put another way, economic incidence reflects the actual change in an individual's or firm's resources due to the tax. [2] The statutory incidence of the tax is irrelevant to the economic incidence of the tax. [2] In fact, the economic incidence is ...
A poll tax, also called a per capita tax, or capitation tax, is a tax that levies a set amount per individual. It is an example of the concept of fixed tax. One of the earliest taxes mentioned in the Bible of a half-shekel per annum from each adult Jew (Ex. 30:11–16) was a form of the poll tax. Poll taxes are administratively cheap because ...