Flashcards on Taxation: Market Effects, Principles, and Systems
Taxation: Market Effects, Principles, and Systems Explained
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Taxation
55 cards
Card 1
Question: What are the four desirable features of a tax system listed in the content?
Answer: Certainty, Convenience, Economic (low administrative cost relative to revenue), and (implied) Equity/efficiency balancing.
Card 2
Question: What does 'certainty' mean in the context of taxation?
Answer: Taxpayers need to know what taxes they owe and governments should have some certainty about how much they can collect.
Card 3
Question: What does 'convenience' refer to for a tax system?
Answer: Paying taxes should be made as easy as possible.
Card 4
Question: What is meant by the 'economic' feature of a tax system in the content?
Answer: The cost of collecting and administering taxes must be less than the amount collected.
Card 5
Question: What central question is used to evaluate tax equity?
Answer: Who bears the burden of taxes (tax incidence).
Card 6
Question: According to the content, who actually bears the burden of corporation tax?
Answer: The workers, customers and shareholders of a corporation.
Card 7
Question: What trade-off is described as the difficulty in formulating tax policy?
Answer: Balancing the often conflicting goals of efficiency and equity.
Card 8
Question: How is government tax revenue calculated from the size of a tax and quantity sold?
Answer: Tax revenue = T × Q, where T is the size of the tax and Q is the quantity sold.
Card 9
Question: Why do taxes cause deadweight losses?
Answer: Because they prevent buyers and sellers from realizing some of the gains from trade.
Card 10
Question: How does deadweight loss change as the tax rate increases?
Answer: With each increase in the tax rate, deadweight loss rises even more rapidly than the size of the tax.