公共政策经济分析Chap19 Taxes on Consumption and Wealth.ppt

Chapter 19 – Taxes on Consumption and Wealth 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. 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 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 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