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15 Cards in this Set
- Front
- Back
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Personal Tax Base - 3 options |
Income Wealth Consumption |
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Income base - proxy name? |
Comprehensive Income Base (CIB) |
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What is CIB made up of? |
Sum current consumption + changes in net wealth |
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Problems w/ Income Base (first 3) |
1. Capital gains taxed on accrual vs. realization 2. Large Income fluctuations\ 3. CIB should be adjusted for HE - disabilities |
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Problems w/ Income base (last 3) |
4. Administrative problems - accural basis, inflation 5. Need to integrate PIT with CIT - double taxation 6. Does family pay or individual?
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Consumption base - why? |
1. Equity - tax on consumers is what is taken out of social pot 2. Efficiency - does not distort savings choice 3. Admistrative - simpler, PIT without savings or K income |
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Three bases of consumption |
1. Consumption Services 2. Expenditures 3. Capital income exempt
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Consumption- services based |
- includes all expenditures on non-durable and flows of consumption services from durable |
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Consumption - Expenditure based |
Includes expenditure on durable, non-durable goods Problems in years with big expenditures Tax liability follows expenditure, not ability to pay
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Consumption - Capital income exempt base |
Tax Cons, savings but not K income Administratively simple, politcally difficult |
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Wealth Base |
-run down wealth in order to consume -many forms of welath are difficult to value -over life-time wealth is equivalent to PV of income |
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Benefit Taxation |
-Taxed according to benefit received from public goods and services
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4 Parts of Theory? |
1. Incidence - who bears burden of tax-incidence by income 2. Excess burden - DWL 3. Incentives - does taxing income affect work effort, savings, risk taking 4. Optimal Tax Structure |
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Tax Incidence - Statuatory vs. Economic |
Statuatory - who is legally responsible for collecting tax and remitting tax to gov't Economic- who actually pays tax after behavior changes induced by tax
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5 Observations of tax incidence |
1. People bear taxes 2. How do we classify people? 3. Consider uses of income 4. Depends on market structure 5. Depends on how revenue is raised and how it is used |
