《公共经济学 Public Economics》课程PPT教学讲稿（英文版）Chapter 19 Taxes on Consumption and Wealth Public Economics

Chapter 19-Taxes on Consumption and Wealth Public economics

1 Chapter 19 – Taxes on Consumption and Wealth Public Economics

Introduction There is substantial dissatisfaction with the federal personal and corporate income tax systems One possibility is to adopt a consumption tax whose base is actual consumption Another possibility is a tax on wealth Whose base is accumulated saving

2 Introduction • There is substantial dissatisfaction with the federal personal and corporate income tax systems. • One possibility is to adopt a consumption tax whose base is actual consumption. Another possibility is a tax on wealth, whose base is accumulated saving

Retail sales Tax Several types on sales taxes levied on wide variety of commodities General sales tax impose the same tax rate on the purchase of all commodities Selective sales tax is levied at different rates on the purchase of different commodities Also known as excise tax or differential commodity tax

3 Retail Sales Tax • Several types on sales taxes levied on wide variety of commodities: – General sales tax impose the same tax rate on the purchase of all commodities. – Selective sales tax is levied at different rates on the purchase of different commodities. • Also known as excise tax or differential commodity tax

Retail sales Tax Table 19.1 shows tax revenue collected from various sales taxes Federal government levies no general sales tax. but does tax motor fuel alcoholic beverages, tobacco, and some other commodities Large majority of states have sales tax, with rates between 2.9% and 7.25%

4 Retail Sales Tax • Table 19.1 shows tax revenue collected from various sales taxes. • Federal government levies no general sales tax, but does tax motor fuel, alcoholic beverages, tobacco, and some other commodities. • Large majority of states have sales tax, with rates between 2.9% and 7.25%

Table 19.1 Table 19.1 State and local sales tax revenues by source (S billions) Source State Local General sales tax 164 S29.7 Motor fuel 29.2 0.8 Alcoholic beverages 3.9 0.3 Tobacco 8.2 0.2 Public utilities 8.9 7.3 Percent of own- 36.7% 100% source revenue from sales taxes SOURCE: US Bureau of the Census (2002, p. 270]. Figures are for 1999

Table 19.1

Retail sales Tax Sales taxes generally take one of two forms A unit tax is a given amount for each unit purchased (e.g, motor fuel tax that is a certain number of cents per gallon of gasoline An ad valorem tax is computed as a percentage of the value of the purchase

6 Retail Sales Tax • Sales taxes generally take one of two forms: – A unit tax is a given amount for each unit purchased (e.g., motor fuel tax that is a certain number of cents per gallon of gasoline). – An ad valorem tax is computed as a percentage of the value of the purchase

Retail sales Tax Rationalizations for a sales tax Administrative Considerations Collected at retail level. have to monitor fewer units Nonetheless, still difficult, and defining the tax base somewhat arbitrary Underground markets/ smuggling Optimal Tax Considerations It can be shown that the income tax is not optimal differential commodity taxes can improve welfare Inverse elasticity rule could guide the rate setting

7 Retail Sales Tax • Rationalizations for a sales tax – Administrative Considerations • Collected at retail level, have to monitor fewer units. Nonetheless, still difficult, and defining the tax base somewhat arbitrary. • Underground markets / smuggling – Optimal Tax Considerations • It can be shown that the income tax is not optimal, differential commodity taxes can improve welfare. • Inverse elasticity rule could guide the rate setting

Retail sales Tax Rationalizations for a sales tax Other considerations Sin taxes Merit goods

8 Retail Sales Tax • Rationalizations for a sales tax – Other considerations • Sin taxes • Merit goods

Retail sales Tax Efficiency and Distributional Implications Would the pattern of sales tax rates minimize excess burden? Overall excess burden depends on both the elasticities of each good and the degree of substitutability or complementarity with other goods Equal tax rates is almost certainly not efficient

9 Retail Sales Tax • Efficiency and Distributional Implications – Would the pattern of sales tax rates minimize excess burden? – Overall excess burden depends on both the elasticities of each good and the degree of substitutability or complementarity with other goods. – Equal tax rates is almost certainly not efficient

Retail sales Tax Efficiency and Distributional Implications When viewed in a lifetime perspective(rather than an annual perspective), general sales taxes are somewhat progressive More generally, however, statutory incidence of sales tax is not the same as the economic incidence 10

10 Retail Sales Tax • Efficiency and Distributional Implications – When viewed in a lifetime perspective (rather than an annual perspective), general sales taxes are somewhat progressive. – More generally, however, statutory incidence of sales tax is not the same as the economic incidence