PROBLEMS AND APPLICATIONS

PROBLEMS AND APPLICATIONS 1. In a published source or on the Internet, find out whether the U.S. federal government had a budget deficit or surplus last year. What do policymakers expect to happen over the next few years? (Hint: The website of the Congressional Budget...

CASE STUDY

CASE STUDY WHO PAYS THE CORPORATE INCOME TAX? The corporate income tax provides a good example of the importance of tax ‘incidence for tax policy. The corporate tax is popular among voters. After all, corporations are not people. Voters are always eager to have...

TAX INCIDENCE AND TAX EAUlTY

TAX INCIDENCE AND TAX EAULITY Tax incidence-the study of who bears the burden of taxes-is central to  valuating tax equity. As we first saw in Chapter 6, the person who bears the burden of a tax is not always the person who gets the tax bill from the government....

CASE STUDY

CASE STUDY HORIZONTAL EQUITY AND THE MARRIAGE TAX The treatment of marriage provides an important example of how difficult it is to achieve horizontal equity in practice. Consider two couples who are exactly the same except that one couple is married and the...

The Flat-tax Revolution

The Flat-tax Revolution The more complicated a country’s tax system becomes, the easier it is for governments to make it more complicated still, in an accelerating process of proliferating insanity-until, perhaps, a limit of madness is reached and a spasm...