Lectures in Macroeconomics- Charles W. Upton Good Taxes

Taxes Without Efficiency Losses Poll Taxes Pollution Taxes Property Taxes

Good Taxes Poll Taxes Basically a tax of $x a person. Southern States had them basically as a device to restrict the vote. Whatever their heritage, the taxes have no disincentive effect on –Hours worked –Saving

Good Taxes Pollution Taxes S D PoPo QoQo $11 $10

Good Taxes Pollution Taxes S QoQo A different supply curve. The less pollutants cost firms, the more they will emit.

Good Taxes Pollution Taxes S QoQo Q1Q1 MC We should reduce pollutants to Q 1, where MC =MB.

Good Taxes Pollution Taxes S QoQo Q1Q1 MC T Tax pollutants! Do good! Collect money!

Good Taxes Property Taxes D S $10

Good Taxes Property Taxes D S $10 $5 Suppose we impose a 50% tax on property receipts The amount owners get falls to $5

Good Taxes Property Taxes D S $10 $5 The shaded area shows the efficiency loss; the value of the mutually advantageous trades forgone by suppliers and customers.

Good Taxes Property Taxes D S $10 $5 The shaded area shows the efficiency loss; the value of the mutually advantageous trades forgone by suppliers and customers. There are none. Ergo, no efficiency loss

Good Taxes Property Taxes D S $10 $5 Property taxes fall on both land and improvements. This graph assumes no tax on improvements only land.

Good Taxes End ©2004 Charles W. Upton. All rights reserved