Tax incidence

Examples of Tax incidence in the following topics:

• Tax Incidence and Elasticity

  • Tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
  • Tax incidence refers to who ultimately pays the tax, the producer or consumer, and the resulting societal effect..
  • Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay, the tax.
  • The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
  • The producer is unable to pass the tax onto the consumer and the tax incidence falls on the producer.

• Tax Incidence, Efficiency, and Fairness

  • Tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare.
  • In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare.
  • Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay, the tax.
  • In this example, consumers bear the entire burden of the tax; the tax incidence falls on consumers.
  • Policymakers must consider the predicted tax incidence when creating them.

• Taxation Impact on Economic Output

  • Tax incidence falls mostly upon the group that responds least to price, or has the most inelastic price-quantity curve.
  • Tax incidence is the effect a particular tax has on the two parties of a transaction; the producer that makes the good and the consumer that buys it.
  • To understand how elasticities influence tax incidence, its important to consider the two extreme scenarios and how the tax burden is distributed between the two parties.
  • The producer is unable to pass the tax onto the consumer and the tax incidence falls on the producer .
  • This potential increase in tax could be called marginal, because it is a tax in addition to existing levies.

• Comparing Marginal and Average Tax Rates

  • An average tax rate is the ratio of the total amount of taxes paid, T, to the total tax base, P, (taxable income or spending), expressed as a percentage.
  • Broadly, the marginal tax rate equals the change in taxes, divided by the change in tax base, expressed as a percentage.
  • A progressive tax is a tax in which the tax rate increases as the taxable base 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.
  • A regressive tax is a tax imposed in such a manner that the average tax rate decreases as the amount subject to taxation increases .

• The Boston Massacre and Military Occupation

  • The Boston Massacre was an incident on March 5, 1770, in which nine British Army soldiers killed five colonial civilian men.
  • The Boston Massacre, called "The Incident on King Street" by the British, was an incident on March 5, 1770, in which British Army soldiers killed five colonial civilian men.
  • British troops had been stationed in Boston since 1768, to protect and support crown-appointed colonial officials attempting to enforce unpopular parliamentary legislation and taxes.
  • Two more people died later of wounds sustained in the incident.
  • In the days and weeks following the incident, a propaganda battle was waged between Boston's radicals and supporters of the government.

• Corporate and Payroll Taxes

  • Many countries impose a corporate tax, also called corporation tax or company tax, on the income or capital of some types of legal entities.
  • The taxes may also be referred to as income tax or capital tax.
  • The effective tax rate is the average corporate tax rate on the company's income and this takes into consideration tax benefits included in a current tax year.
  • Corporations are also subject to a variety of other taxes including: property tax, payroll tax, excise tax, customs tax and value-added tax along with other common taxes, generally in the same manner as other taxpayers.
  • Deductions from an employee's wages are taxes that employers are required to withhold from employees' wages, also known as withholding tax, pay-as-you-earn tax (PAYE), or pay-as-you-go tax (PAYG).

• Tax Rate

  • The tax rate is the amount of tax expressed as a percentage.
  • In a tax system, the tax rate describes the ratio at which a business or person is taxed .
  • An average tax rate is the ratio of the amount of taxes paid to the tax base (taxable income or spending).
  • To calculate the average tax rate on an income tax, divide the total tax liability by the taxable income.
  • A marginal tax rate is the tax rate that applies to the last dollar of the tax base (taxable income or spending) and is often applied to the change in one's tax obligation as income rises.

• Individual Taxes

  • In U.S. constitutional law, direct taxes refer to poll taxes and property taxes, which are based on simple existence or ownership.
  • These include income tax witholding, social security and medicare taxes, and unemployment taxes.
  • Sales tax is an indirect tax levied on the state level, including taxes on retail sale, lease and rental of goods, as well as some services.
  • Sales tax is calculated as the purchase price times the appropriate tax rate.
  • The estate tax is an excise tax levied on the right to pass property at death.

• Taxes

  • Examples of an indirect tax include sales tax and VAT (value added tax).
  • Progressive Tax: The more a person earns, the higher the tax rate.
  • Regressive Tax:In a regressive tax system, poorer families pay a higher tax rate.
  • Although a regressive tax system is never explicitly used, some claim a sales tax is a type of regressive tax.
  • Categorize types of taxes into ad valorem taxes and excise taxes

• Shay's Rebellion: 1786-1787

  • Protesters, including many war veterans, shut down county courts in the later months of 1786 stopped judicial hearings for tax and debt collection.
  • Scattered resistance continued until June 1787, with the single most significant action being an incident in Sheffield in late February, where 30 rebels were wounded (one mortally) in a skirmish with government troops.