{"id":30299,"date":"2016-08-02T01:00:12","date_gmt":"2016-08-02T05:00:12","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=30299"},"modified":"2018-03-12T11:38:48","modified_gmt":"2018-03-12T15:38:48","slug":"qotd-the-deadweight-costs-of-different-forms-of-taxation","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2016\/08\/02\/qotd-the-deadweight-costs-of-different-forms-of-taxation\/","title":{"rendered":"QotD: The deadweight costs of different forms of taxation"},"content":{"rendered":"<blockquote><p>All taxes have something called a \u201cdeadweight cost\u201d. This is simply economic activity that doesn\u2019t happen because of the simple fact that we\u2019re levying a tax. If we tax the purchase of apples then fewer apples will be purchased. This is entirely divorced, by the way, from any good that might be achieved by how we spend that revenue collected. We also know that different taxes have different deadweight costs. We even have a ranking of them. At the top, with the highest costs for the revenue collected, we\u2019ve transactions taxes like the financial transactions tax under consideration. This is so expensive that it\u2019s a really, really, bad idea to tax in this manner. Then come capital and corporate taxes, then with lower again deadweights incomes taxes, then consumption and then finally repeated taxes on real property, or land value taxation. If we were interested only in efficiency (we\u2019re not, equity is important too) then we would collect as much as we could from a land value tax, then from Pigou and sin taxes (carbon emissions, cigarettes, booze) then general consumption taxes and so on. Perhaps leaving corporates and capital entirely untaxed. And there\u2019s a whole field of study, optimal taxation theory, that suggests that we really should do that and the general prescription is the progressive consumption tax. There\u2019s general agreement that on purely those efficiency grounds this is about the best we can do with a tax system.<\/p>\n<p>Tim Worstall, <a href=\"http:\/\/www.forbes.com\/sites\/timworstall\/2015\/02\/14\/surprisingly-perhaps-state-republicans-are-actually-correct-on-the-economics-of-this\/\" target=\"_blank\">&#8220;Surprisingly Perhaps, State Republicans Are Actually Correct On The Economics Of This&#8221;, <em>Forbes<\/em><\/a>, 2015-02-14.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>All taxes have something called a \u201cdeadweight cost\u201d. This is simply economic activity that doesn\u2019t happen because of the simple fact that we\u2019re levying a tax. If we tax the purchase of apples then fewer apples will be purchased. This is entirely divorced, by the way, from any good that might be achieved by how [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":35193,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[25,84,41],"tags":[1189,118],"class_list":["post-30299","post","type-post","status-publish","format-standard","hentry","category-economics","category-government","category-quotations","tag-pigouviantax","tag-taxes"],"jetpack_featured_media_url":"https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2016\/06\/favicon.png","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-7SH","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/30299","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=30299"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/30299\/revisions"}],"predecessor-version":[{"id":30300,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/30299\/revisions\/30300"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media\/35193"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=30299"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=30299"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=30299"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}