PUP-3002 Lecture Notes - Lecture 3: Laffer Curve, Tax Rate, Regressive Tax
5 Apr 2018
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Society wants specific programs, but individuals may not be willing to pay for them. Solution, give us your money or we will put you in jail. Done by collecting percentages of earning from individuals and legal entities. Poor pay a higher fraction of their income in taxes than do higher income earners ex; sales tax, sin tax. Lower income earners pay a lower fraction of their income in taxes than higher income. Everyone, regardless of income, pays the same fraction of income in taxes (russia, saudi arabia, ukraine) Increased taxes give the government more money to spend: government jobs, assistances, etc. Increased taxes may deter business, leading to growth decline and job loss. A hypothetical curve showing the optimal relationship between taxation and economic activity. The optimal marginal tax rate is between 50 and 80. Average market income and government transfers ** more info. The amount of unemployment is measured and reported by the us bureau of labor statistics.
