Tax Incident Essay Example for Free

Tax Incident Essay Government generally collect taxes to generate revenue and question arise here is that after imposition of taxation, which group will bear the tax burden. After implementation of tax, there would be the division of tax burden between byres and sellers which is known as tax incidence. Tax incidence is linked to the price elasticity of demand and supply. If supply is more elastic than demand then the tax burden falls upon the buyers and when the demand is more elastic than supply then the producers will bear the cost of the tax. Tax incidence is basically the analysis of the effect of taxation on the distribution of economic welfare. Tax incidence expose that which group either consumer or producer is going to pay the price of new tax and it falls mostly on the group that has the inelastic price quantity or respond least to the price. Tax incidence or the tax burden does not depend on that where the revenue is collected but it depends upon the elasticity of demand and supply. The purpose of this review on the literature is that to analyze the effect of particular tax on the distribution of economic welfare. Section 2 is related to the literature review and section 3 is related to the conclusion. 2. Review of Literature 2.1 The incidence of sin taxes: Kotakorpi (2008) has examined the incidence of taxation on sin commodities. Sin commodities are those commodities whose current consumption causes utility cost in the future. Consumers are considered to be time inconsistent or having too much consumption of unhealthy goods. Sin taxes means taxes on unhealthy commodities. In the context of monetary cost sin taxes would lead to influence the individual’s utility. Increase in the consumption of sin commodities would lead to a higher monetary cost or higher utility benefit from self controlling. The author has analyzed the welfare effect of the sin taxes and the welfare effect of sin taxes depends upon the elasticity of demand. The individuals with less income group having higher elasticity of demand as compare to the high income group. There is possibility of progressive taxation as the benefit is high for the less income group. He has measure the incidence on individual utility through the overall impact of the tax. Sin taxes would lead to increase the welfare if the demand for  the unhealthy good is more elastic. For the case of poor demand is more elastic so the burden of sin taxes falls least on the poor as compare to the rich. It’s not necessary that taxation always hurts low income group but can be fair for the poor. The welfare of the economy would increases in case of sin taxes. 2.2 The incidence of tax on pure rent in a small open economy: Petrucci (2006) has investigate the effects of a land tax on capital structure and foreign investment in a life cycle small open economy with the assumption that labor supply is take as endogenous. Land is an as asset which is used as an input for the production. Tax on land means the higher would be the capital stock. The land tax leads to reduce the price of land but crowds out investment, consumption and welfare of nationals would increase. The consequences of land taxation depends upon that how government adopted the tax transfer program. Labor supply and domestic output reduced by land taxation, while the wealth and national income are increased. If land taxation were used to finance the un-productive government expenditure then the effects of taxation on the capital stock and aggregate wealth would be neutral. The main assumption of this article is the endogenous labor supply regarding the long run incidence of taxes. The final effects of land taxation on economic growth and wealth formation depend upon that the government tax transfer program. When tax revenues are distributed as lump-sum payments then the land taxation increases consumption and stimulate wealth but leads to reduce the capital stock. 2.3 Tax incidence in bargaining: Chae (2002) has investigates two-person bargaining model where one party is taxed and the other is non-taxed party who shares the burden of taxes. Sufficient condition is that tax party would entirely bears the tax burden are given and non-tax party would actually to benefit from taxation is given. In a competitive market, buyers and sellers share the tax burden and the larger burden falling on the party that has lower price elasticity. In a bargaining model, if the gross revenue of the tax party does not change then the taxation does not affect the other party. Thus the tax burden will falls completely on tax party. If the tax party is risk neutral and has zero opportunity cost then the burden of taxation falls completely on the tax party. If the tax party is risk averse with the constant relative risk  aversion, then the tax burden is shared by the non-tax party as initial wealth is also positive. The results show here that a risk loving party loses more form taxation than the ri sk averse party. In general, a bargaining party that is less risk averse has more bargaining power but the party with more bargaining power can also be more at risk to taxation. 2.4 The general equilibrium incidence of environmental taxes: Fullertton (2007) used a simple general equilibrium with pollution and has found the incidence of pollution tax on prices of outputs and on the returns to inputs. When both sectors are equally capital intensive and capital is a better substitute for pollution then is labor. Then return to capital would rise comparative to wage. These results provide evidence that the substitutability of capital and labor has very important consequences for environmental policy. The results show that a 10% increase in the pollution tax rate reduces pollution from 2% to 10%. The model in this paper provides theoretical analysis of the incidence and distributional effects of environmental policy. It shows that how differential substitution between factors greatly effect the burdens of a pollution tax. Environmental taxation has mostly focused on efficiency effects. This paper provides theoretical general equilibrium model of tax incidence of an environmental tax that allows for general forms of substitution among inputs of labor, capital and pollution. Pollution is modeled as an input along with capital and labor. Environmental policies can have important effects on firms’ demands for capital and labor inputs, which can impact the returns to owners of capital and labor in general equilibrium. 2.5 The tax system incidence on unemployment: A country specific analysis for the OECD economies: Ramon et.al (2008) examines the incidence of different tax structure on unemployment in OECD countries through wage bargaining model. The first important result from the analysis is that fiscal wedge does not play an important role in explaining unemployment. The more the payroll taxes are influenced towards the employees, the higher would be the unemployment. This is due to the higher elasticity of taxes impose on workers so that tax components affect unemployment even when the overall fiscal wedge remains unchanged. As unemployment determination is considered, supply side determinants (productivity growth) positively related to the  unemployment determination but negatively related with demand side determinants (inflation). This suggests that high situation of unemployment persistence may tend to require more structural reforms. If changes in the tax composition that leave the overall amount of revenues unchanged are harmless in terms of unemployment persistence then new possibilities for policy makers can be considered. 2.6 Tax and subsidy incidence equivalence theories: experimental evidence from competitive markets: Ruffle (2005) stated that tax burden does not depend upon that where revenue is collected but the division of tax burden between buyers and sellers only depend upon the elasticity of supply and demand. The theory of tax incidence equivalence is strongly related to the market formation and also enlarges to the subsidies. The benefit of the subsidy is not related to the one that who is in fact getting the subsidy. Basically, government should charge tax to decrease the agreement costs and it should not to leave the restrictive producers at disadvantages. In the competitive equilibrium market, particular shifts of supply and demand curves are considered to analyze the tax and subsidy equivalence theorems. Both the smaller no of markets and sufficiently large no of markets can trade profitably at the competitive price. The results propose that the discussion topic is that who is paying the tax or receiving the subsidy should pay attention on formation that at what degree market is under the competition level. And if the market is competitive then the tax should be manage in a manner that reduces the expenditure cost. 2.7 Tax incidence under oligopoly: a comparison of policy approaches: Hamilton (1999) examined the tax incidence under the oligopolistic market structure. Basically two forms of commodity taxation considered are the unit (or specific) tax and sales (or ad valorem) tax. The author has incorporated the shift parameters in a generalized tax schedule to analyze the incidence of taxation under oligopoly. Greater industry output and increased output per firm is associated with output elastic schedule. If there is a case of free entry in oligopoly then there would be the larger reduction in industry fix cost relative to the tax schedule that is less responsive to the equilibrium level of output. Taxation under oligopoly, benefit would be  increased with revenue neutral reforms to relatively output elastic tax plan. The results of other studies show that with specific or ad valorem taxation leads to efficiency loss in oligopolistic industries with a fix number of firms. Degressive taxes with both specific tax and ad volarem tax leads to efficiency gain, when the tax output is elastic enough. 2.8 The incidence of income tax on wages and labour supply: Bingley and lanot (2002) has analyzed the determination of equilibrium and labor supply in the presence of income taxes. They found the strong evidence of fractional shifting of income tax from worker to employer. As tax is not fully shifted if the income tax is incident on equilibrium wage. There is not shifting of burden of taxation as labor supply response to wages is measured. And the labor supply elasticity with respect to wage is very small after income taxation. Higher income tax leads to a higher employment. In the article, the author showed the effect of income tax on gross wages and labor supply wage elasticity. The incidence of taxation on gross earnings is a mix of labor supply and gross wage responses. In this model the author has chosen the Denmark country. In Denmark, income tax varies regionally as workers pay tax according to where they live rather than where they work. The result shows that the, in Denmark, gross earnings bear less than the full burden of labor taxation and gross wages bear proportionately more of that tax burden. The results shows, by ignoring the labor supply response to a tax change may lead to a wrong conclusion that the tax is fully incident on equilibrium earnings. 2.9 The incidence of personal income taxation: evidence from the tax reform act of 1986: D. kubik (2004) examined in this paper about the short run incidence of personal income taxation in US by analyzing that how wage structure shifted after the tax reform act of 1986. In this analyses pre tax wages and income of workers are endogenously determined through tax policy. Workers of an economy with different skills, the pre tax wage of each skill depend upon the quantity of labor supplied. Basically, the purpose of the paper is that whether changes in personal income tax affect the US wage formation through the evidence from the tax reform act of 1986. Firstly, the author has tested that how marginal tax rate of the median worker in  each occupation changed due to the tax reform and then tested the wages of workers in each occupation before and after 1986. Personal income taxation changes through the tax reform act of 1986 have affected the wage distribution and results shows that the legislation has lowered the marginal tax rate of high income individuals but low income individuals relatively unaffected. If the training and potential earnings of the people are quite similar then the tax reform act of 1986 will affected the people in the same way. High skill workers in a profession earns high incomes leads to a sharp decline in marginal tax rate but on the other hand low income individuals faced minor changes in marginal tax rate. The result depends on the assumption that labor supply decisions are affected by the marginal tax rate. Labor supply decision changes as individuals change their work hour decision or can cause a worker to drop the profession. Wage rate were affected by the shifts of workers supply in the labor market due to the tax reform 1986. 2.10 Tax incidence when individuals are time-inconsistent: the case of cigarette excise tax: Gruber and Koszegi (2004) stated that lower income groups consume much of the unhealthy or sin commodities to which excise tax is imposed in a greater proportion as compare to the higher income level. There is negative relationship between income and part of income which is spending on sin commodities. For example the imposition of tax on gasoline would be fall on the low income level and their utilities would be affected after increase in taxes. In this model consumers are considered to be time inconsistent in their consumption decision. In the model author has considered the smoking decision which is more appropriate in time inconsistent structure. The basic purpose of the incidence analysis is to determine that who is going to bear the tax through different tax policies and the adequate measure for this analysis is utility. Bad commodities such as smoking have been under discussion among policy makers and academics. The important point here is that tax on harmful addictive commodities is equal to the external cost and such taxes are highly regressive. Conclusion Government basically collects taxes to generate revenues the important thing  is that through which procedure it is being collected and who is going to bear the larger part of tax. After implementation of tax what would be the effect of tax on the welfare of the economy. Redistribution of income can be increased through taxation. Employment can be increased through labor income taxation. Welfare of the economy can be increased through sin taxes. Taxation on the unhealthy commodities leads to increase the welfare of the economy. References: Bingley, Paul and Lanot, Gauthier (2002), The incidence of income tax on wages and labour supply†, â€Å"Journal of public econmics†, vol: 83, page 173-194 Chae, Suchan (2002), â€Å"Tax incidence with bargaining†, â€Å"Economics Letters†. Vol: 77, page 199-204 Fullerton, Don and Heutel, Garth â€Å"The general equilibrium incidence of environmental taxes†, â€Å"journal of public economics†, vol: 91, page 571-591 Garcà ­a, Josà © Ramà ³n and Sala Hector, (2008), â€Å"The tax system incidence on unemployment: A country-specific analysis for the OECD economies†, â€Å"Economic Modelling† Gruber, Jonathan and Koszegi, Botond (2004), Tax incidence when individuals are time-inconsistent: the case of cigarette excise taxes†,† Journal of public economics†, vol: 88, page 1959-1987 Hamilton, Stephen F. (1999), â€Å"Tax incidence under oligopoly: a comparison of policy approaches†, â€Å"Journal of public economics†, vol: 71, page 233-245 Kotakorpi, Kaisa (2008), â€Å"The incidence of sin taxes†, â€Å"Economics Letters† vol: 98, page 95-99 Kubik, D. Jeffrey (2004), â€Å"The incidence of personal income taxation: evidence from the tax reform act of 1986†, â€Å"Journal of public economics†, vol: 88, page 1567-1588 Petrucci, Alberto (2006), â€Å"The incidence of a tax on pure rent in a small open economy†, â€Å"Journal of public economics†, vol: 90, page 921-933 Ruffle J.Bradley (2005), â€Å"Tax and subsidy incidence equivalence theories: experimental evidence from competitive markets†, â€Å"Journal of public economics†, vol: 89, page 1519-1542

Alcohol :: Free Essays

Alcohol Alcohol is a drug which is used by any age and any ethnic background, it can have serious effects but not many of us realize this. Some people drink a lot and become addicted to it, the alcohol effects part of the brain which controls all the decision making, the outcome of this is loss of inhibitions. It affects the physical side which causes blurred vision and loss of balance. Drinking large amounts of alcohol at once is known as binge drinking, this has serious effects such as unconsciousness, coma and death. As you may realize by now alcohol can be a very dangerous drug but only if you take more than the recommended amount which is: Men - should drink no more than 21 units of alcohol per week and no more than four units in any one day. Women - should drink no more than 14 units of alcohol per week and no more than three units in any one day. If you take more than the recommended amount and drink every so often this will lead to physical damage, the effects of this are, increasing the possibility of catching diseases and making other diseases worse. Excessive drinking is related with loss of brain cells, liver failure, stomach ulcers, certain types of cancer, nerve damage, heart failure and epilepsy. Even though alcohol is used to make people feel relaxed, excessive drinking over a long period of time increases anxiety and causes depression. It also affects problems with sleeping, mood swings, violence and suicide. If you personally drink a lot and would like to stop, it may help if you keep a diary which records how much alcohol you drink every day, also if you could set yourself a target of how much you are allowed to

Gandhi, King, and Mandela What Made Non-Violence Work?

In the Twentieth Century, the great leaders Mohandas Gandhi, Nelson Mandela, and Martin Luther King Jr. all used non-violence to bring about change to their respective countries. What made nonresistance work was the charisma of the leaders to persuade the people to not fight back, the peaceful protests, the leaders’ willingness to accept their punishments, and their struggle for unity. In order for non-violence to work, people have to be non-violent. Each of these leaders were so powerful that they convinced even aggressive people to fight by not fighting.In Mandela’s case, he viewed nonresistance as the only way to bring democracy to everyone in South Africa because the government was many times more powerful than the movement (document 3). If Mandela had used violence, his people would have been hopelessly crushed and would remain oppressed. Martin Luther King persuaded all volunteers to give up all possible weapons before going to protest (document 5). He convinced t he volunteers that all they needed to have was the ideology that they were right. Gandhi wrote a letter to Lord Irwin stating that if something is not done about the injustice of the British, he would lead a protest on the Salt Laws (document 1).Gandhi gathered volunteers and taught the importance of life. Nonresistance worked so well because the peaceful protests gave off such a powerful message. Mandela campaigned for volunteers to not retaliate even when they are being attacked (document 6). He convinced people fighting back would ultimately lead to their failure. King took part in counter sit-ins where black people peacefully protested segregated lunch counters (document 1). The peace of the movement showed how extreme and hateful the majority of white people were at the time. After Gandhi was arrested, one Englishman documented Mme. Naidu leading a peaceful protest that lead to hundreds of people getting beat without flinching a muscle (document 4).The cruelty was so great that even the Englishman had to turn away from the gross and sickening display. One of the key factors that made non-violence work was that the leaders openly accepted their punishments. Gandhi did not hesitate to go to jail, where he spent 2,338 days total (document 7). King noted that people rushed down to the police station to be arrested in the Montgomery bus boycott (document 8). He himself was arrested 37 times and jailed 14 times. Nelson Mandela discussed with other officials what would happen if they received the death sentence (document 9). He was prepared to  die knowing that he would inspire more people to fight for democracy.Finally, non-violence worked because the leaders all made an effort to unify their country. After the British became more violent, Gandhi tried to appease the British by protesting with peace (document 10). Salt on the Lion’s tail represents Gandhi’s effort to pacify the British. Martin Luther King addressed in his speech that he would li ke to see white and black people integrate together without hatred (document 11). In this perspective, King is a hero for all of America by unifying it regardless of skin color. Mandela discovered in prison that he wanted freedom for all people in South Africa (document 12).When both sides stand together, everyone wins in the battle for democracy. Mohandas Gandhi, Nelson Mandela, and Martin Luther King Jr. are all incredible people who stood up for social equality. Through non-violent ways, they lead the world to become a greater place. They all persuaded their people to peacefully protest and to not resist their attackers. They all also sacrificed to unify their country and gladly suffered the consequences of doing so.

Trace the Development and Change in the Place of Worship...

So we can say that the beginning of worship started first with sacrifice Since the sacrifice is practice of worship. which we can see in the Genesis 4:3-4(And in process of time it came to pass, that Cain brought of the fruit of the ground an offering unto the LORD.And Abel, he also brought of the firstlings of his flock and of the fat thereof. And the LORD had respect unto Abel and to his offering). Another sacrificial worship we find that Noah making sacrifice and God is pleased in it in Genesis 8:20-21(And Noah builded an altar unto the LORD; and took of every clean beast, and of every clean fowl, and offered burnt offerings on the altar.And the LORD smelled a sweet savour; and the LORD said in his heart, I will not again curse the†¦show more content†¦Books of Exodus and Leviticus gives detail and specific instruction on how to carry the worship and sacrifice service. Over and over is scripture that God commanded Israelites to worship Him(Deuteronomy 6:13 says, You shall fear only the Lord your God; and you shall worship Him and swear by His name. Exodus 33:10 says, When all the people saw the pillar of cloud standing at the entrance of the tent, all the people would arise and worship, each at the entrance of his tent.). From Moses to till the time of Kind David, the worship place was temporary. King David expressed his desire to to build a permanent place of worship. However God didn’t permit to build since he was man of war, who had shed much human blood(1 Chronicles 22:7-9 7 David said to Solomon: My son, I had it in my heart to build a house for the Name of the LORD my God. 8 But this word of the LORD came to me: You have shed much blood and have fought many wars. You are not to build a house for my Name, because you have shed much blood on the earth in my sight. 9 But you will have a son who will be a man of peace and rest, and I will give him rest from all his enemies on every side. His name will be Solomon, and I will grant Israel pea ce and quiet during his reign.) So Solomon carries this duty to build temple.The temple was similar to the tabernacle in that they were largely devoted to sacrificial worship. But they were also places for prayers (1 Kings 8:22-53; Isaiah 56:7;