1
Q
Progressive tax
A
Takes a larger share of the income of high-income taxpayers than that of low-income taxpayers
2
Q
Regressive tax
A
Takes a smaller share of the income of high-income taxpayers than that of low-income taxpayers
3
Q
3 rules of tax incidence
A
- The statutory burden of a tax doesn’t describe who really bears the tax
-2. The side of the market on which the tax is imposed is irrelevant to the distribution of the tax burdens
-3. Parties with inelastic supply or demand bear taxes; parties with elastic supply or demand avoid them
- The statutory burden of a tax doesn’t describe who really bears the tax
4
Q
Consumer tax burden
A
(New price - Price paid before) + per unit tax payments by consumers
5
Q
Producer tax burden
A
(Price received now - Price received before) + per unit tax payments by producers
6
Q
Tax wedge
A
The difference between what consumers pay and what producers receive (net of tax) from a transaction
Consumer burden + producer burden
