Labor Taxes - PAM2040 TaxingLaborSupply Sugary Drinks

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PAM 2040 Taxing Labor Supply
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Is there “excess” excess burden with  commodity taxes? Everything Else Sugary Drinks
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How  should  the government levy  commodity taxes? Tradeoff between revenue raised and deadweight loss Ramsey Rule :                   =  value of additional                                                      dollar of gov’t revenue Simplified form: Inverse Elasticity Rule λ = i i MR MDWL i D i ε τ - = *
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Necessary Trade offs Ramsey Rule:  Tax rate on goods should be  inversely proportional to elasticity  Implies low tax on luxury good, high tax on  necessities Marginal Dead Weight Loss:  Low tax rate on  most goods better than high tax rate on few Smaller taxes on lots of things more efficient than  high tax on one thing
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Labor Taxes - PAM2040 TaxingLaborSupply Sugary Drinks

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