applications_taxation 税收概要1.ppt

8 Application: The Costs of Taxation Application: The Costs of Taxation Welfare economics is the study of how the allocation of resources affects economic well-being. Buyers and sellers receive benefits from taking part in the market. The equilibrium in a market maximizes the total welfare of buyers and sellers. THE DEADWEIGHT LOSS OF TAXATION How do taxes affect the economic well-being of market participants? THE DEADWEIGHT LOSS OF TAXATION It does not matter whether a tax on a good is levied on buyers or sellers of the good . . . the price paid by buyers rises, and the price received by sellers falls. Figure 1 The Effects of a Tax How a Tax Affects Market Participants A tax places a wedge between the price buyers pay and the price sellers receive. Because of this tax wedge, the quantity sold falls below the level that would be sold without a tax. The size of the market for that good shrinks. How a Tax Affects Market Participants Tax Revenue T = the size of the tax Q = the quantity of the good sold T ? Q = the government’s tax revenue Figure 2 Tax Revenue Figure 3 How a Tax Effects Welfare How a Tax Affects Market Participants Changes in Welfare A deadweight loss is the fall in total surplus that results from a market distortion, such as a tax. How a Tax Affects Welfare How a Tax Affects Market Participants The change in total welfare includes: The change in consumer surplus, The change in producer surplus, and The change in tax revenue. The losses to buyers and sellers exceed the revenue raised by the government. This fall in total surplus is called the deadweight loss. Deadweight Losses and the Gains from Trade Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade. Figure 4 The Deadweight Loss DETERMINANTS OF THE DEADWEIGHT LOSS What determines whether the deadweight loss from a tax is large or small? The magnitude of the deadweight loss depends on how much the quantity supplied and quantity dem