TAILIEUCHUNG - Lecture Economics (18th edition): Chapter 17 - McConnell, Brue, Flynn's

Chapter 17 - Public choice theory and the economics of taxation. Learning objectives of this chapter include: Conveying economic preferences through majority voting; government failure; tax philosophies and the tax burden; tax shifting, tax incidence, and efficiency losses from taxes. | Public Choice Theory and the Economics of Taxation Chapter 17 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Objectives Conveying economic preferences through majority voting Government failure Tax philosophies and the tax burden Tax shifting, tax incidence, and efficiency losses from taxes 17- Majority Voting Can result in inefficiency Over or underproduction of a public good Individuals think only of themselves Strength of preferences ignored Interest groups Logrolling 17- Majority Voting Inefficient Majority “No” Vote Inefficient Majority “Yes” Vote $300 $300 Benefit; Tax Benefit; Tax 0 0 $700 $250 $200 $100 $350 $350 Adams Adams Benson Benson Conrad Conrad “NO” “NO” “YES” “YES” “YES” “NO” MSB > MSC $1,150 > $900 Inefficient Since “NO” Wins! MSB 17- Majority Voting Paradox of voting Paired choice majority voting Flawed procedure Outcome depends on vote order Median voter model Politicians appeal to the middle Extremes pick the middle Implications 17- Government Failure Special-interest effect Pork-barrel politics Rent-seeking behavior Clear benefits, hidden costs Limited and bundled choice Bureaucracy and inefficiency Imperfect institutions 17- The Tax Burden How should the tax burden be apportioned? Benefits-received principle Ability-to-pay principle Progressive tax Regressive tax Proportional tax 17- Types of Taxes Personal income tax Sales tax Corporate income tax Payroll tax Property tax 17- Tax Incidence Who really pays the tax? Excise tax Tax burden depends on elasticity Inelastic vs. elastic Efficiency loss of an excise tax Deadweight loss Depends on elasticity Transfer of surplus to govt. 17- Tax Incidence of an Excise Tax 0 2 4 6 8 10 12 14 5 10 15 20 25 Q P Price (Per Bottle) Quantity (Millions of Bottles Per Month) S D St Tax $2 17- Tax Incidence Why impose an excise tax? Discourage consumption Redistributive goals .

• Kinh tế học
• Lecture Microeconomics
• Economic problem
• Public choice theory
• The economics of taxation
• Government failure
• Tax philosophies
• Microeconomics theory
• Microeconomics applications
• Kinh tế vĩ mô
• Scope of microeconomic theory
• Normative analyses
• Demand curves
• Supply curves
• Consumer choice
• Theory of consumer choice
• Consumption choices
• Substitution effects
• Consumer choice theory
• Excise subsidies
• Economic efficiency
• Competitive equilibrium
• Relating output to inputs
• Empirical estimation
• Cost of production
• Shortrun cost
• Profit maximization
• Perfectly competitive markets
• Competitive model
• Excise taxation
• Monopolist’s demand
• Marginal revenue curves
• Product pricing
• Monopoly power
• Monopolistic competition
• Cournot model
• Game theory
• Economics of information
• Noncompetitive market models
• Iterated dominance
• Input demand curve
• Leisure choice
• Wage rates
• Minimum wage
• Hidden costs
• General equilibrium analysis
• Public goods