08税收成本 Application The Costs of Taxat讲课资料.ppt

Chapter 8 Application: The Costs of Taxation;Taxes are often a source of heated political debate. In 1776 the anger of the American colonies over British taxes sparked the American Revolution. More than two centuries later Ronald Reagan was elected president on a platform of large cuts in personal income taxes, and during his eight years in the White House the top tax rate in income fell from 70 percent to 28 percent. In 1992 Bill Clinton was elected in part because incumbent George Bush had broken his 1988 campaign promise, “Read my lips: no new taxes.” At least in this regard, the younger George Bush did not follow in his father’s footsteps: As a candidate he promised a tax cut, and as president he made sure to deliver. ;Application: The Costs of Taxation;In this chapter, we can simplify the graphs by not bothering to show the shift. The key result for our purposes here is that the tax places a wedge between the price buyers pay and the price sellers receive. Because of this tax wedge, the quantity sold falls below the level that would be sold without a tax. In other words, a tax on a good causes the size of the market for that good to shrink. ;Figure 1 The Effects of a Tax;A tax on a good places a wedge between the price that buyers pay and the price that sellers receive. The quantity of the good sold falls. (N.Gregory Mankiw , Principles of Economics, Chapter 8, p160);How A Tax Affects Market Participants;Figure 2 Tax Revenue;The tax revenue that the government collects equals T×Q, the size of the tax T times the quantity sold Q. Thus, tax revenue equals the area of the rectangle between the supply and demand curves. (N.Gregory Mankiw , Principles of Economics, Chapter 8, p161);Figure 3 How a Tax Effects Welfare;How A Tax Affects Market Participants;Figure 8-3 How a Tax Effects Welfare;How A Tax Affects Welfare;How A Tax Affects Market Participants;Deadweight Losses and the Gains from Trade;Deadweight Losses and the Gains from Trade;Deadweight Losses and