20Tax Inefficiencies and Their Implications for Optimal Taxation（课件）- 《财政与金融》同步教学（人民大学·第五版）

20 20.1 Taxation and Economic Efficiency 20.2 Optimal Commodity Taxation 20.3 Optimal Income Taxes 20.4 Tax-Benefit Linkages and the Financing of Social Insurance Programs 20.5 Conclusion Tax Inefficiencies and Their Implications for Optimal Taxation 1 of 45 1 20 Introduction Arnold Harberger, one of the pioneers of the general equilibrium tax incidence model, wrote of his experience in Indonesia, where cars are taxed more heavily than motorcycles. “Three-wheel cycles were converted, by artful additions, into virtual buses, or at least taxis. Sometimes a single bench was added, with the passenger looking backward. Other times the cycle was stretched at the back, with two benches going down each side, and maybe even with an extra little running board cutting laterally across the rear (where the rear bumper of the car would be). I must say I was truly astounded when I saw my first eight-passenger motorcycle.” This example highlights a simple fact: markets do not take taxes lying down. If there is some action that market participants can undertake to minimize the burden of taxation, they will do so. of 45 C H A P T E R 2 0 ■ T A X I N E F F I C I E N C I E S A N D T H E I R I M P L I C A T I O N S F O R O P T I M A L T A X A T I O N 2 20 Taxation and Economic Efficiency Usually, the market produces efficient outcomes. Taxes interfere in the market and reduce efficiency. People substitute away from the taxed product, using less-efficient alternatives. Eight-person motorcycles in Indonesia Some taxes have much larger efficiency costs than others. of 45 C H A P T E R 2 0 ■ T A X I N E F F I C I E N C I E S A N D T H E I R I M P L I C A T I O N S F O R O P T I M A L T A X A T I O N 3 B C Price per gallon (P) Quantity in billions of gallons (Q) 0 S1 D1 P1 = $1.50 Q1 = 100 S2 E Tax = $0.50 Q2 = 90 P2 = $1.80 P3 = $1.30 F G D A Taxation and Economic Efficiency: Graphical Approach 20.1 Deadweight loss, DWL A tax is imposed, and supply shifts from S1