The Tax System And The Costs Of Taxation Flashcards
Deadweight loss and tax: S=inelastic
Small
Deadweight loss
The fall in total surplus that results from a market distortion such as tax
Deadweight loss and tax: S elastic
Large
Deadweight loss and tax: D inelastic
Small
Deadweight loss and tax: D elastic
Large
What are Adam Smiths 4 canons of taxation
Equality
Certainty
Convenience
Economic
What is the Ax tax rate
ATR- tax liability/ taxable income
What is marginal tax rate
Extra taxes paid on an additional unit of income
What is a lump-sum tax
Tax that is the same amount for every person
What’s the benefits principle
The idea that people should pay taxes based on the benefits they receive from gov services
Ability to pay principle
Idea that taxes should be levied on a person acc to how well that person can shoulder the burden
Vertical equity
Idea that taxpayers with a berated ability to pay taxes should pay larger amounts
Horizontal equity
Idea that taxpayers with similar abilities to pay taxes should pay the same amount
Proportional/flat tax
Tax for which high income and low income taxpayers pay the same fraction of income
Regressive tax
Tax for which the high income taxpayers pay a smaller fraction of their income than do the low income taxpayers
