曼昆微觀經(jīng)濟學(xué)chapter12

1、Copyright 2006 Nelson, a division of Thomson Canada Ltd.Copyright 2006 Nelson, a division of Thomson Canada Ltd. Get an overview of how the Canadian government raises and spends money Examine the efficiency costs of taxes Learn alternative ways to judge the equity of a tax system See why studying ta

2、x incidence is crucial for evaluating tax equity Consider the tradeoff between efficiency and equity in the design of a tax systemCopyright 2006 Nelson, a division of Thomson Canada Ltd.020406080100Taxes paid in Ben Franklins time accounted for 5 percent of the average persons income.1789Copyright 2

3、006 Nelson, a division of Thomson Canada Ltd.0204060801001789Today, taxes account for up to 47% of the average Canadians income.TodayCopyright 2004 South-WesternCopyright2004 South-WesternCopyright 2006 Nelson, a division of Thomson Canada Ltd. Federalist structurePolitical power divided between fed

4、eral government and provincial governmentsFederal government has the greater powerLocal and municipal governments are granted powers by the provincial governmentCopyright 2006 Nelson, a division of Thomson Canada Ltd. Federal government responsibilitiesMatters of national interest: national defence

5、and foreign policy, international trade, competition policy, criminal law and money and bankingDelivery of national social programs, e.g., Employment Insurance (EI) and Canadian Pension Plan (CPP).Has unlimited taxing powersCopyright 2006 Nelson, a division of Thomson Canada Ltd. Provincial governme

6、nt responsibilitiesHealth care, education, welfare, natural resources within their boundaries, and civil lawExtensive taxing powers, but less than federal governmentAccount for more than half of activities by the public sector in CanadaCopyright 2006 Nelson, a division of Thomson Canada Ltd. Transfe

7、rs from federal government to provincesIntended help finance provincial programs in health, education and welfare Equalization paymentsTo make it possible for all provinces to provide comparable services to residentsCopyright 2006 Nelson, a division of Thomson Canada Ltd. The Canadian federal govern

8、ment collects about 45 percent of the taxes in our economy. The largest source of revenue for the federal government is the personal income tax, which accounts for almost half of total federal revenue.Copyright2004 South-WesternCopyright 2006 Nelson, a division of Thomson Canada Ltd. Personal Income

9、 TaxesThe is the tax rate applied to each additional dollar of income.Higher-income individuals pay a larger percentage of their income in taxes.Copyright 2006 Nelson, a division of Thomson Canada Ltd.Copyright2004 South-WesternCopyright 2006 Nelson, a division of Thomson Canada Ltd. The next-larges

10、t source of federal revenue is the Goods and Services Tax (GST)accounts for about 16% of federal government revenuelevied at a 7% rate on the sales of most goods in Canada, with some notable exceptions (like food) Excise and customs duties account for another 7% of federal revenueExcise taxes are sa

11、les tax on specific goods (e.g., gasoline, cigarettes and alcohol)Customs duties are taxes on imported goods Copyright 2006 Nelson, a division of Thomson Canada Ltd. Corporate income taxes account for 12% of federal revenuebased on a corporations profits Payroll taxestax on wages a firm pays its wor

12、kerspaid by both employees and employers used to finance Employment Insurance (EI) program Canada Pension Plan (CPP)Copyright 2006 Nelson, a division of Thomson Canada Ltd. Federal spending goes to interest on the debt and program spendingOld Age Security (OAS)Canada Health and Social Transfer (tran

13、sfers to the provinces)Employment Insurance payments (EI)National defenceCopyright 2006 Nelson, a division of Thomson Canada Ltd.Copyright2004 South-WesternCopyright 2006 Nelson, a division of Thomson Canada Ltd.is an excess of government receipts over government spending.is an excess of government

14、spending over government receipts.Copyright 2006 Nelson, a division of Thomson Canada Ltd. Provincial and Local governments collect more than 50% of taxes in the economyTransfers from the federal governmentPersonal income taxesGeneral sales taxesExcise taxesProperty taxesCorporate income taxesHealth

15、 premiums and payroll taxesTaxes$Copyright 2006 Nelson, a division of Thomson Canada Ltd.Copyright2004 South-WesternSource: Adapted from Statistics Canada, CANSIM database, Series V206417-V206448Copyright 2006 Nelson, a division of Thomson Canada Ltd. Health, education and social services (“the big

16、three”Accounted for 68% of total spending in 2002 Protection, transportation and communicationAccounted for 9% of total provincial spendingCopyright 2006 Nelson, a division of Thomson Canada Ltd.Copyright2004 South-WesternCopyright 2006 Nelson, a division of Thomson Canada Ltd. Policymakers have two

17、 objectives in designing a tax system.Efficiency EquityCopyright 2006 Nelson, a division of Thomson Canada Ltd. Measures of One tax system is more efficient than another if it raises the same amount of revenue at a smaller cost to taxpayers. An efficient tax system is one that imposes small deadweig

18、ht losses and small administrative burdens. Copyright 2006 Nelson, a division of Thomson Canada Ltd. The Cost of Taxes to TaxpayersThe tax payment itselfDeadweight losses Resulting when tax distorts consumer decisionsAdministrative burdens The cost of compliance with tax lawsCopyright 2006 Nelson, a

19、 division of Thomson Canada Ltd. Because taxes distort incentives, they entail deadweight losses.The deadweight loss of a tax is the reduction of the economic well-being of taxpayers in excess of the amount of revenue raised by the government.Copyright 2006 Nelson, a division of Thomson Canada Ltd.

20、Complying with tax laws creates additional losses to taxpayers. Taxpayers lose additional time and money documenting, computing, and avoiding taxes over and above the actual taxes they pay.The administrative burden of any tax system is part of the inefficiency it creates. Copyright 2006 Nelson, a di

21、vision of Thomson Canada Ltd. The is total taxes paid divided by total income. The is the extra taxes paid on an additional dollar of income.Copyright 2006 Nelson, a division of Thomson Canada Ltd. A is a tax that is the same amount for every person, regardless of earnings or any actions that the pe

22、rson might take.Copyright 2006 Nelson, a division of Thomson Canada Ltd. Questions to answer to determine equityHow should the burden of taxes be divided among the population?How do we evaluate whether a tax system is fair? Economists tend to focus on the efficiency of taxes Canadian policy debates

23、are dominated by discussions about whether the tax burden is distributed fairlyCopyright 2006 Nelson, a division of Thomson Canada Ltd. Evaluating the equity of a tax systemBenefits principleAbility-to-pay principle$Copyright 2006 Nelson, a division of Thomson Canada Ltd. The is the idea that people

24、 should pay taxes based on the benefits they receive from government services. An example is a gasoline tax:Tax revenues from a gasoline tax are used to finance our highway system.People who drive the most also pay the most toward maintaining roads.Copyright 2006 Nelson, a division of Thomson Canada

25、 Ltd. The is the idea that taxes should be levied on a person according to how well that person can shoulder the burden. The ability-to-pay principle leads to two corollary notions of equity.Vertical equityHorizontal equityCopyright 2006 Nelson, a division of Thomson Canada Ltd. is the idea that tax

26、payers with a greater ability to pay taxes should pay larger amounts.For example, people with higher incomes should pay more than people with lower incomes. Copyright 2006 Nelson, a division of Thomson Canada Ltd. Vertical Equity and Alternative Tax SystemsA is one for which high-income and low-inco

27、me taxpayers pay the same fraction of income.A is one for which high-income taxpayers pay a smaller fraction of their income than do low-income taxpayers.A is one for which high-income taxpayers pay a larger fraction of their income than do low-income taxpayers.Copyright 2006 Nelson, a division of T

28、homson Canada Ltd. is the idea that taxpayers with similar abilities to pay taxes should pay the same amounts. For example, two families with the same number of dependents and the same income living in different parts of the country should pay the same federal taxes.Copyright2004 South-WesternCopyri

29、ght2004 South-WesternCopyright 2006 Nelson, a division of Thomson Canada Ltd.Copyright2004 South-WesternCopyright 2006 Nelson, a division of Thomson Canada Ltd.Copyright2004 South-WesternCopyright 2006 Nelson, a division of Thomson Canada Ltd. The difficulty in formulating tax policy is balancing the often conflicting goals of efficiency and equity. The study of who bears the burden of taxes is central to evaluating tax equity. This study is called tax incidence.Copyright 2006 Nelson, a division of Thomson Canada Ltd. The Canadian government raises revenue using