Posts tagged with: tax

Blog author: jcarter
Tuesday, December 13, 2016
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Note: This is post #13 in a weekly video series on basic microeconomics.

What is a subsidy? A subsidy is really just a negative or reverse tax, explains Alex Tabbarok. Instead of collecting money in the form of a tax, the government gives money to consumer or producers. In this video by Marginal Revolution University, Tabbarok looks at the subsidy wedge and who benefits the most from different subsidies.

(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Previous in series: Understanding tax revenue and deadweight loss

Note: This is post #12 in a weekly video series on basic microeconomics.

Why do taxes exist? What are their effects? In this video by Marginal Revolution University, economist Alex Tabarrok explains how taxes affect consumer surplus and producer surplus. He also discusses the concept of deadweight by considering a real-world example from the 1990s: taxing luxury yachts.

(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Previous in series: Who pays the tax?

fairshare-taxesDuring her presidential campaign, Sec. Hillary Clinton has repeatedly said she’d implement a tax system in which the wealthy “pay their fair share in taxes.” Expecting the rich to pay what is “fair” is not asking to much of them. But one question that is rarely considered is, “What if they already do pay their fair share?”

Before we can determine whether the rich pay enough we have to first ask what would be “fair.” How much of total tax revenues should, say, the top one percent of households pay? Five percent? 10 percent? 20 percent?

According to new IRS statistics from 2014 tax returns, the top one percent of households paid almost 40 percent of all income taxes collected by the federal government.

In 2014, 139,562,034 filed an income tax return, putting just under 1.4 million people into the category of “one percenters.” They earned 20.58 percent of all income and paid 39.48 percent of the taxes. The average adjusted gross income (AGI) for the group was $465,626 (the “poorest” people in the group had an AGI of $257,110).

This chart by the Wall Street Journal’s Richard Rubin highlights that the top 25 percent (avg. AGI: $77, 714) paid nearly 86.78 percent of all income taxes.
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Blog author: jballor
Monday, October 10, 2016
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taxesLast week, before the most recent news about Donald Trump and the current US presidential campaign burst onto the scene, Think Christian ran a short reflection of mine on the question of taxation. As I argue, “There is no duty to pay anything other than what we owe in taxes. But whatever we do owe we must pay in good conscience and out of a spirit of justice.”

If you spend any time on the internet reading about political liberty, you are likely to come across the formula, “Taxation is theft.” The picture the Apostle Paul paints is rather different. The point of departure for my thoughts on taxation is his instruction: “Give to everyone what you owe them: If you owe taxes, pay taxes.”

So the moral status of taxation as such doesn’t seem to be problematic. But as I note in the piece, the question of implementation is different and much more complex. Just because taxation isn’t in itself theft, that doesn’t mean that there aren’t forms or levels of taxation that cannot devolve to that level.

Leo XIII, in his encyclical Rerum Novarum, considers appropriate taxation. He warns of the necessity “that a man’s means be not drained and exhausted by excessive taxation.” He continues,

The right to possess private property is derived from nature, not from man; and the State has the right to control its use in the interests of the public good alone, but by no means to absorb it altogether. The State would therefore be unjust and cruel if under the name of taxation it were to deprive the private owner of more than is fair. (47)

As with so many questions of political economy, the issue turns on the question, “Who decides?” What Paul and Leo make clear, however, is that there is a divine standard of justice to which those who require and those who pay taxes must both adhere.

sintaxcan-300x189Philadelphia may like to think of itself as the “city of brotherly love,” but its latest tax increase is not so friendly to the poor.

Last week the city council passed a regressive soda tax proposal that will levy 1.5 cents per liquid ounce on distributors. According to Quartz, the tax will apply to regular and diet sodas, as well as other drinks with added sugar, such as Gatorade, lemonades, and iced teas.

This tax on sugary drinks is what is often called a “sin tax.” This is an excise tax that is specifically intended to target certain goods deemed harmful to society but that we don’t want (or can’t) ban completely, such as tobacco or alcohol. The idea is that by adding or increasing the tax, it increases the overall price of the good, thereby lowering consumer demand.

Sin taxes are a form of sumptuary law, a law that attempts to regulate permitted consumption of particular goods and services. Throughout history sumptuary laws have been used to reinforce social hierarchies or class-based discrimination. Normally this would be done by prohibiting certain social classes from being able to purchase a good, like the 16th-century French law that banned anyone but princes from wearing velvet. But modern sin taxes try to express the same types of social disapproval in more subtle ways.
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How-to-Understand-Federal-Tax-FormsAfter almost three decades of filling out increasing complex tax forms, you’d think I’d be used to it (or at least resigned to the onerous task). But every tax season I complain even more than I did the year before. Why do I have to do this?

Perhaps the problem, notes Daniel J. Hurst, is that I’m forgetting that it’s part of my responsibility as a Christian. “While we may have grumbled when filing our taxes this year,” says Hurst, “did we pause to think that giving the government part of our income is a way we honor the Lord and express our trust in his grand design?”
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Conservatives are known for arguing about the ill effects of over-regulation, reminding us how it stifles innovation, cramps entrepreneurship, and harms small businesses. Where we’re less effective is connecting this reality to the more fundamental abuses it wields on human dignity in general and the poor and vulnerable in particular.

In a 45-minute talk given at Heritage Action, Senator Ben Sasse of Nebraska offers a detailed critique of over-regulation in America.

Pointing first to the proper scope of regulatory policies, Sasse proceeds to note the increasing overreach of the federal government and the range of reasons to oppose it. Watch an excerpt here:

Although arguments about over-regulation and taxation are bound to involve in depth discussions about numbers and econometrics, Sasse reminds us that our focus must remain on the preservation of freedom and human dignity. (more…)