{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

EC 201 11-26-08 - tax o “progressive” tax of income...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
EC 201 11-26-08 Characteristics of “good” tax system (all else equal) o 1. Raise revenue o 2. Low costs of administration +compliance Income tax complicated High compliance costs Payroll tax simple Low compliance costs o 3. Low deadweight loss o 4. “fair” Normative A. horizontal equity –similar taxpayers should pay similar tax o Possible violations of horizontal equity: 1. Non-neutrality of income to marital status “marriage tax” “marriage bonus” 2. Property tax: Michigan since 1994 Cap on assessment for tax purposes If sold, re-assessed to full mkt. value 3. Property taxes in Boston 1960s White neighborhoods assessed at 10% Black neighborhoods assessed at 110% B. vertical equity- higher income people should pay more
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: tax o “progressive” tax: % of income paid in tax as income ↑ ↑ o “proportional” tax: % of inc. paid in tax is constant o “regressive” tax: % of inc. paid in tax as inc. ↓ ↑ o Individual income tax- labor inc. + capital inc. Michigan: exemption $3400/person • Not taxed • Tax rate=0 • Then flat rate of 4.35% on all taxable inc. above exemption • Somewhat progressive over much of income range, because of exemption • Federal +many states + other countries income tax o Exemption o “graduate” marginal tax rates mtr as income ↑ ↑ • payroll tax- on labor earnings no exemptions o flat 15.3% up to ceiling ($102, 000) o 2.9% above ceiling...
View Full Document

{[ snackBarMessage ]}

Page1 / 2

EC 201 11-26-08 - tax o “progressive” tax of income...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon bookmark
Ask a homework question - tutors are online