Intro to Taxation - PAM2040 IntroductiontoTaxation...

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PAM2040 Introduction to Taxation
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Types of Taxation Income Individual income tax, capital gains tax, corporate income tax Earnings  Payroll tax Wealth Property tax, estate taxes Consumption Sales tax / excise tax
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Tax Policy Questions Can we devise tax systems that are more or less  “fair”? What should we tax?   Should certain economic agents not have to pay  taxes?
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Goal of “optimal” tax system Minimize  excess burden  of tax system – how  much worse off the tax has made the tax payer,  outside of tax collection There will  always  be some loss due to income  taxation Max U(X,H-L) st wL=(1+t)X MRS leisure, consumption =w/(1-t) MRT=value of labor in workplace = w MRS ~= MRT
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Measuring tax “fairness”  Marginal Tax Rate  – the tax you pay per next  dollar of income  (tax bracket) ti<15,100, mtr=0.10
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This document was uploaded on 10/26/2011 for the course PAM 2040 at Cornell University (Engineering School).

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Intro to Taxation - PAM2040 IntroductiontoTaxation...

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