studymidterm2

studymidterm2 - Taxation regressive Trickle-down theory...

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Taxation regressive Trickle-down theory Decreasing block rate Higher income pays a smaller fraction of their income Progressive Verticle – increase income pays increase tax Increase income pays an increase fraction of income Increasing block rate flat (proportionate) Horizontal Equal income = equal tax burden Types of taxes (e.g. income) Income = progressive Property = progressive Sales = regressive Capital Gains = regressive Fairness in taxation Benefits principle of taxation o Pay in proportion to the benefit you receive Ability-to-pay principle of taxation o Pay according to wealth Equity Horizontal o Equal income = equal tax burden Verticle o Increase income, increase tax burden Tax burden/incidence Environmental policy Sources of greenhouse emissions Electric power 33% Transportation 27% Industrial 19% Residential/commercial 10% In the home: o Transport o Water heating Solutions for anthropogenic global warming (e.g. subsidies/taxes) Earth Day = countries volunteer to decrease pollution o COSTS
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Incentive to decrease pollution? Free riders Bribes o BENEFIT Decrease pollution Cooperation Direct Regulation = fines if pollute above standard o COSTS Fair? There are differences in company costs, etc No incentive to pollute below the standard o BENEFIT Decrease pollution Direct Tax = sticks = tax those who pollute o COSTS Antagonize firms
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studymidterm2 - Taxation regressive Trickle-down theory...

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