GEOLOGY 002 Lecture Notes - Lecture 20: Tax, Social Welfare Function, Transfer Pricing
Document Summary
Governments need revenues to fund public services and redistribution ambitious government with grand plans and projects need to find creative ways of increasing the revenues they can raise. Administrative or operating costs of taxation: the levying of it may require a great number of officers. Distortionary costs: it may obstruct the industry of the people, and may thus diminish, or perhaps destroy, some of the funds which might enable them more easily to pay. Costs of tax evasion: may put an end to the benefit which the community might have received of the employment of them frequently ruined by tax penalties. Compliance costs: subjecting the people to the frequent visits and the odious examination of the tax gatherers too much unnecessary trouble. Efficiency : encompasses the aim of minimizing the distortionary effects of taxation. Canons lack clear guidance on what to do when they conflict equity versus efficiency.
