曼昆經(jīng)濟(jì)學(xué)原理英文課件Chap08

1、Application: The Costs of Taxation Chapter 8 Copyright 2001 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any part of the work should be mailed to: Permissions Department, Harcourt College Publishers, 6277 Sea Harbor Drive, Orlando, Florida 32887-6777. Harcourt, In

2、c. items and derived items copyright 2001 by Harcourt, Inc. The Costs of Taxation How do taxes affect the economic well- being of market participants? Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. The Costs of Taxation It does not matter whether a tax on a good is levied on

3、 buyers or sellers of the goodthe price paid by buyers rises, and the price received by sellers falls. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. The Effects of a Tax. Price 0 QuantityQuantity without tax Supply Demand Price without tax Price buyers pay Quantity with tax

4、 Size of tax Price sellers receive Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. The Effects of a Tax uA tax places a wedge between the price buyers pay and the price sellers receive. uBecause of this tax wedge, the quantity sold falls below the level that would be sold wit

5、hout a tax. uThe size of the market for that good shrinks. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Tax Revenue T = the size of the tax Q = the quantity of the good sold T Q = the governments tax revenue Harcourt, Inc. items and derived items copyright 2001 by Harcourt

6、, Inc. Tax Revenue. Price 0 QuantityQuantity without tax Supply Demand Price sellers receive Quantity with tax Size of tax (T) Quantity sold (Q) Tax Revenue (T x Q) Price buyers pay Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. How a Tax Affects Welfare. Quantity0 Price Dem

7、and Supply Q1 A B C F D E Q2 Tax reduces consumer surplus by (B+C) and producer surplus by (D+E) Tax revenue = (B+D) Deadweight Loss = (C+E) Price buyers pay = PB P1 Price without tax = PSPrice sellers receive = Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Changes in Welfa

8、re from a Tax Without TaxWith TaxChange Consumer SurplusA + B + CA- (B + C) Producer SurplusD + E + FF- (D + E) Tax RevenuenoneB + D+ (B + D) Total SurplusA + B + C + D + E + FA + B + D + F- (C + E ) The area C+E shows the fall in total surplus and is the deadweight loss of the tax. Harcourt, Inc. i

9、tems and derived items copyright 2001 by Harcourt, Inc. How a Tax Affects Welfare The change in total welfare includes: uThe change in consumer surplus, uThe change in producer surplus, uThe change in tax revenue. uThe losses to buyers and sellers exceed the revenue raised by the government. uThis f

10、all in total surplus is called the deadweight loss. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Deadweight Losses and the Gains from Trade Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade. Harcourt, Inc. ite

11、ms and derived items copyright 2001 by Harcourt, Inc. The Deadweight Loss. Quantity0 Price Demand Supply Q1 PB Price = P1 without tax PS Q2 Size of tax Lost gains from trade Cost to sellers Value to buyers Reduction in quantity due to the tax Harcourt, Inc. items and derived items copyright 2001 by

12、Harcourt, Inc. Determinants of Deadweight Loss What determines whether the deadweight loss from a tax is large or small? uThe magnitude of the deadweight loss depends on how much the quantity supplied and quantity demanded respond to changes in the price. uThat, in turn, depends on the price elastic

13、ities of supply and demand. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Tax Distortions and Elasticities. Quantity Price Demand Supply 0 When supply is relatively inelastic, the deadweight loss of a tax is small. (a) Inelastic Supply Size of tax Harcourt, Inc. items and d

14、erived items copyright 2001 by Harcourt, Inc. Tax Distortions and Elasticities. Quantity Price Demand Supply 0 Size of tax When supply is relatively elastic, the deadweight loss of a tax is large. (b) Elastic Supply Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Tax Distorti

15、ons and Elasticities. Quantity Price Demand Supply 0 When demand is relatively inelastic, the deadweight loss of a tax is small. (c) Inelastic Demand Size of tax Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Tax Distortions and Elasticities. Quantity Price Demand Supply 0 S

16、ize of tax When demand is relatively elastic, the deadweight loss of a tax is large. (d) Elastic Demand Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Determinants of Deadweight Loss The greater the elasticities of demand and supply: u the larger will be the decline in equil

17、ibrium quantity and, u the greater the deadweight loss of a tax. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. The Deadweight Loss Debate Some economists argue that labor taxes are highly distorting and believe that labor supply is more elastic. Harcourt, Inc. items and der

18、ived items copyright 2001 by Harcourt, Inc. The Deadweight Loss Debate Some examples of workers who may respond more to incentives: uWorkers who can adjust the number of hours they work uFamilies with second earners uElderly who can choose when to retire uWorkers in the underground economy (i.e. tho

19、se engaging in illegal activity) Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Deadweight Loss and Tax Revenue as Taxes Vary With each increase in the tax rate, the deadweight loss of the tax rises even more rapidly than the size of the tax. Harcourt, Inc. items and derived

20、 items copyright 2001 by Harcourt, Inc. Deadweight Loss and Tax Revenue. PB QuantityQ20 Price Q1 Demand Supply Tax revenue PS Deadweight loss (a) Small Tax Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Demand Supply Tax revenue PB QuantityQ20 Price Q1 PS Deadweight loss Dea

21、dweight Loss and Tax Revenue. (b) Medium Tax Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Tax revenue PB QuantityQ20 Price Q1 Demand Supply PS Deadweight loss Deadweight Loss and Tax Revenue. (c) Large Tax Harcourt, Inc. items and derived items copyright 2001 by Harcourt,

22、Inc. Deadweight Loss and Tax Revenue uFor the small tax, tax revenue is small. uAs the size of the tax rises, tax revenue grows. uBut as the size of the tax continues to rise, tax revenue falls because the higher tax reduces the size of the market. Harcourt, Inc. items and derived items copyright 20

23、01 by Harcourt, Inc. Deadweight Loss and Tax Revenue Vary with the Size of the Tax. (a) Deadweight Loss Deadweight Loss 0 Tax Size Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Deadweight Loss and Tax Revenue Vary with the Size of the Tax. (b) Revenue (the Laffer curve)Tax

24、Revenue 0Tax Size Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Deadweight Loss and Tax Revenue Vary with the Size of the Tax uAs the size of a tax increases, its deadweight loss quickly gets larger. uBy contrast, tax revenue first rises with the size of a tax; but then, as

25、 the tax gets larger, the market shrinks so much that tax revenue starts to fall. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. The Laffer Curve and Supply-Side Economics uThe Laffer curve depicts the relationship between tax rates and tax revenue. uSupply-side economics re

26、fers to the views of Reagan and Laffer who proposed that a tax cut would induce more people to work and thereby have the potential to increase tax revenues. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Summary uA tax on a good reduces the welfare of buyers and sellers of t

27、he good. And the reduction in consumer and producer surplus usually exceeds the revenues raised by the government. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Summary uThe fall in total surplus the sum of consumer surplus, producer surplus, and tax revenue is called the d

28、eadweight loss of the tax. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Summary uTaxes have a deadweight loss because they cause buyers to consume less and sellers to produce less. uThis change in behavior shrinks the size of the market below the level that maximizes total

29、 surplus. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Summary uAs a tax grows larger, it distorts incentives more, and its deadweight loss grows larger. uTax revenue first rises with the size of a tax. uEventually, however, a larger tax reduces tax revenue because it redu

30、ces the size of the market. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Graphical Review Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. The Effects of a Tax. Price 0 QuantityQuantity without tax Supply Demand Price without tax Price buyers pay Qua

31、ntity with tax Size of tax Price sellers receive Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Tax Revenue. Price 0 QuantityQuantity without tax Supply Demand Price sellers receive Quantity with tax Size of tax (T) Quantity sold (Q) Tax Revenue (T x Q) Price buyers pay Harc

32、ourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. How a Tax Affects Welfare. Quantity0 Price Demand Supply Q1 A B C F D E Q2 Tax reduces consumer surplus by (B+C) and producer surplus by (D+E) Tax revenue = (B+D) Deadweight Loss = (C+E) Price buyers pay = PB P1 Price without tax =

33、PSPrice sellers receive = Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. The Deadweight Loss. Quantity0 Price Demand Supply Q1 PB Price = P1 without tax PS Q2 Size of tax Lost gains from trade Cost to sellers Value to buyers Reduction in quantity due to the tax Harcourt, Inc

34、. items and derived items copyright 2001 by Harcourt, Inc. Tax Distortions and Elasticities. Quantity Price Demand Supply 0 When supply is relatively inelastic, the deadweight loss of a tax is small. (a) Inelastic Supply Size of tax Harcourt, Inc. items and derived items copyright 2001 by Harcourt,

35、Inc. Tax Distortions and Elasticities. Quantity Price Demand Supply 0 Size of tax When supply is relatively elastic, the deadweight loss of a tax is large. (b) Elastic Supply Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc. Tax Distortions and Elasticities. Quantity Price Demand Supply 0 When demand is relatively inelastic, the deadweight loss of a tax is small. (c) Inelastic Demand Size of t