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The French:
An important cause of the French revolution.
Contributed to the downfall of Napoleon.
The English:
After the Glorious Revolution, Parliament stripped the King of the
right to tax.
The wig and powder tax.
Tax Features
Smiths Tax Philosophy:
Equality.
Certainty.
Convenience of
payment.
Economy of collection.
What Do We Tax
Income.
Wages.
Interest and dividends.
Consumption.
Sales tax.
Excise tax.
Wealth.
Property (Personal and real).
Capital gains.
Inheritance.
Principles of Taxation
378 in text.):
Sin taxes.
Liquor taxes.
Tobacco taxes.
A tax on income.
A tax on flow.
Generally considered progressive.
Contains both horizontal and vertical equity.
An ability to pay tax.
Generally considered to be anti-growth since tax
payers are taxed twice.
Types:
Federal tax: A marginal tax above a certain level.
Missouri Tax: Marginal to a point and then proportional.
City of St. Louis: A proportional tax.
Supply Side
Tenets of Taxation
Beyond some point, high marginal tax rates on
personal income can reduce peoples
willingness to work.
High marginal tax rates discourage people from
investing in education and improving their work
related skills.
High marginal tax rates encourage people to
work in the underground economy.
(Source: Page 331, McKenzie, Richard B., Macroeconomics, Houghton
Mifflin Co, 1986)
Hausers Law
In 1993, William Kurt Hauser, a San Francisco
economist, said, No matter what the tax rates
have been, in post war America tax revenues have
remained at about 19.5% of GDP.
The data show that the tax yield has been
independent of marginal tax rates over this period,
but tax revenue is directly proportional to GDP.
The implication, based on actual data, is that if the
government wants to increase tax revenue, we
need to increase GDP.
Note the difference between tax avoidance and tax
delinquency.