A report on Tax and Tax incidence

Total revenue from direct and indirect taxes given as share of GDP in 2017
Figure 1 – tax incidence in perfect competition
Pieter Brueghel the Younger, The tax collector's office, 1640
Inelastic supply, elastic demand: the burden is on producers
Substitution effect and income effect with a taxation on y good.
Similar elasticities: burden shared
Budget's constraint shift after an introduction of a lump sum tax or a general tax on consumption or a proportional income tax.
The Laffer curve. In this case, the critical point is at a tax rate of 70%. Revenue increases until this peak, then it starts decreasing.
General government revenue, in % of GDP, from social contributions. For this data, the variance of GDP per capita with purchasing power parity (PPP) is explained in 20% by social contributions revenue.
Egyptian peasants seized for non-payment of taxes. (Pyramid Age)
Public finance revenue from taxes in % of GDP. For this data, the variance of GDP per capita with purchasing power parity (PPP) is explained in 32% by tax revenue.
Diagram illustrating deadweight costs of taxes

In economics, tax incidence or tax burden is the effect of a particular tax on the distribution of economic welfare.

- Tax incidence

The incidence of taxation varies by system, and some systems may be viewed as progressive or regressive.

- Tax
Total revenue from direct and indirect taxes given as share of GDP in 2017

3 related topics with Alpha

Overall

Average tax rates by income groups in France, the United Kingdom, and the United States, 1970 (left) and 2005 (right). Taxes were more progressive in 1970 than in 2005.

Progressive tax

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Average tax rates by income groups in France, the United Kingdom, and the United States, 1970 (left) and 2005 (right). Taxes were more progressive in 1970 than in 2005.
A caricature of William Pitt the Younger collecting the newly introduced income tax.
German marginal and average income tax rates display a progressive structure.
"Tax The Rich" banner at an International Union of Socialist Youth campaign for a financial transaction tax.
The function which defines the progressive approach to an income tax, may be mathematically defined as a piecewise function. In every piece (tax bracket), it must be computed cumulatively, considering the taxes which had already been computed to the previous tax brackets. Pictured is the effective income tax for Portugal in 2012 and 2013.
Distribution of US federal taxes from 1979 to 2013, based on CBO Estimates.

A progressive tax is a tax in which the tax rate increases as the taxable amount increases.

Progressive taxes are imposed in an attempt to reduce the tax incidence of people with a lower ability to pay, as such taxes shift the incidence increasingly to those with a higher ability-to-pay.

Basic Formula for Price Elasticity of Demand

Elasticity (economics)

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In economics, elasticity measures the percentage change of one economic variable in response to a percentage change in another.

In economics, elasticity measures the percentage change of one economic variable in response to a percentage change in another.

Basic Formula for Price Elasticity of Demand
Calculating Price Elasticity of Supply
Basic Formula for Cross-Price Elasticity
Principles of Economics (1890) -- Alfred Marshall
Antoine Augustin Cournot
perfect P-elasticity of Q: Q changes while P = constant
perfect P-inelasticity of Q: P changes while Q = constant
Conventional demand curve (downwards linear slope), with its elasticity
Example of demand curve with constant elasticity
Examples of supply curves with different elasticity
Examples of a non-linear supply curve with its elasticity

Elasticity is an important concept in neoclassical economic theory, and enables in the understanding of various economic concepts, such as the incidence of indirect taxation, marginal concepts relating to the theory of the firm, distribution of wealth, and different types of goods relating to the theory of consumer choice.

For governments, the concept is important for the implementation of taxation.

Budgeted revenues of governments in 2006.

Public finance

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1) The efficient allocation of available resources;

1) The efficient allocation of available resources;

Budgeted revenues of governments in 2006.
Figure 1: General Government (IMF Government Finance Statistics Manual 2001(Washington, 2001) pp.13
Figure 2: Public Sector(IMF Government Finance Statistics Manual 2001(Washington, 2001) pp.15

In this view, public sector programs should be designed to maximize social benefits minus costs (cost-benefit analysis), and then revenues needed to pay for those expenditures should be raised through a taxation system that creates the fewest efficiency losses caused by distortion of economic activity as possible.

The issue of how taxes affect income distribution is closely related to tax incidence, which examines the distribution of tax burdens after market adjustments are taken into account.