Sign In
Not register? Register Now!
Pages:
2 pages/β‰ˆ550 words
Sources:
Check Instructions
Style:
APA
Subject:
Business & Marketing
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 8.64
Topic:

Deadweight Loss and Marginal Excess Tax Burden

Essay Instructions:

It's not all that common to find policy-oriented readings about welfare measures, but here is one we would like for you all to read and consider. Professor Mansk argues that very common economic terms like "inefficiency," "deadweight loss," and "distortion" are actually pejorative terms used in anti-tax rhetoric. These are the exact terms that we defined in this week's lecture and are found in Chapter 3 of your textbook. Dr. Manski argues that economists should discard these terms when conducting analyses of taxation and public spending. Do you agree?
Some issues to consider, but please feel free to use any of these points to help guide your comments or feel free to raise your own points related to this article. Just make sure that your comments reflect your economic knowledge and are related what we are studying in this class:
1. Do the concepts of deadweight loss and marginal excess tax burden make sense to you? Do you agree or disagree with Dr. Manskithat the concept of inefficiency and deadweight loss are inappropriate for discussions regarding taxation and public spending?
2. Do you think that Dr. Manski's comment that "research on deadweight loss appear predestined to make income taxation look bad ... It focuses attention entirely on the social cost of financing government spending, with no regard to the social benefits" is fair? Ifdeadweight loss is a legitimate measure of the social cost of government spending, should it always be paired with the social benefits? An alternative view to Dr. Manski's position might be to argue that there is no necessary link between revenue generation through taxation, which creates a social cost, and the decision as to what the governments spends the money on, which creates a social benefit. We often don't know what the tax money will be spent on, and thus we can only discuss the social cost of taxation.
3. Dr. Manski suggests that we should specify a social welfare function and measure the welfare change of alternative taxation and spending policies. Do you agree with this approach?
4. Dr Manski argues that "increasing the tax rate is socially beneficial if and only if the additional infrastructure spending enabled by the tax rise yields a more than commensurate increase in wages. The optimal public spending level maximizes aggregate net (after tax) income." Do you agree? Can this approach be applied to all government functions Dr. Manski mentions?
Your response should be substantial, but not a long essay.
Link to Texbook: http://students(dot)aiu(dot)edu/submissions/profiles/resources/onlineBook/E5V5H3_Cost-benefit%20analysis%20_%202018.pdf
FUNDAMENTALS OF CBA
CHAPTER 3 Microeconomic Foundations of Cost-Benefit Analysis
Demand Curves
Supply Curves
Social Surplus and Allocative Efficiency
Government Surplus and Allocative Efficiency
Measuring Changes in Welfare

Essay Sample Content Preview:

Questions About Deadweight Loss
Student’s Name
Institutional Affiliation
Questions About Deadweight Loss
The deadweight loss of taxation, often referred to as the excess taxation burdens, denotes the loss of economic efficiency in cases where the equilibrium outcome is not achieved or achievable. It can be termed as the added costs to society and taxpayers due to market inefficiency. Common causes include price ceilings, price floors, monopoly pricing, and taxation.
The concepts of inefficiency, deadweight loss, and distortion are less efficient mechanisms that result in underutilization or wastage of resources due to inefficient market outcomes.According to professor Manski, a vast majority of prominent applied public economists attempt to evaluate the social cost of income tax in relation to the utterly implausible alternative of a lump-sum tax. Its attention is entirely focused on the social cost of funding government spending, without considering the potential social benefits (Rothengatter, 2014).
I agree with Dr. Mansk that the concepts such as deadweight loss, inefficiency, and distortion do not add much weight in taxation and public spending. The reason for this is because they are unnecessary distractions that are not essentially a part of the main process. Therefore, optimal income taxation does not need to employ these pejorative concepts. In my argument, economists ought to discard them and make taxation and public spending analysis distortion-free.
One of the major practical difficulties in evaluating the excess burden of an individual tax outcome or of a system of taxes is the fact that the function of demand interactions can be potentially difficult to measure. For instance, taxes ...
Updated on
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now:

πŸ‘€ Other Visitors are Viewing These APA Essay Samples: