If people's labour supply decreases when the net-of-tax wage increases, then there will no no deadweight loss from a uniform proportional tax on all goods and services. True false or uncertain? Explain.
Illustrate graphically the deadweight loss resulting from the taxation of interest income.
If the income effect is large, then people's labour supply will increase as the marginal tax rate on their labour income increases, so that there is no deadweight loss from the tax. True, false or uncertain? Explain.
Suppose a tax is interest income is introduced, with no rebate or deduction for the interest costs of people who borrow. Discuss the effect such a tax would have on people's saving and/or borrowing.
Discuss critically the following proposal : allow people on welfare to keep some of the money they earn from part-time work, reducing welfare payments by 50 cents for every dollar earned by the welfare recipient.
What factors would determine the incidence of a tax on firms' use of labour, levied only on firms in the service sector of the economy? Restrict attention to the case in which workers are perfectly mobile among different sectors of the economy.
Suppose that demand for commodity a obeys the equation Qa = 20-5Pa, and demand for commodity b obeys the equation Qb = 10-Pb, where Qa and Qb are the quantities demanded, and Pa and Pb are the prices paid by demanders. Suppose also that the two goods have been subjected to commodity taxes, imposed at the optimal levels, so that the Ramsey tax rule is satisfied by the taxes. If Pa = 2 and Pb = 5, what is the relation between the proportional tax rates on the two goods?
What sort of income tax schedule would result in complete equality of people's after-tax incomes? Would this tax schedule be the best policy from the point of view of people with the lowest before-tax incomes? Explain.
Suppose that prices charged for passenger train travel by Via Rail are above the marginal cost of the passengers' trips. Suppose also that this pricing policy cannot be altered. What then should the government do about taxing ( or subsidizing ) inter-city bus trips? Explain.
Currently, taxpayers deduct their contributions to an RRSP from their taxable income. Discuss the implications of replacing this deduction with a tax credit equal to 20 percent of the taxpayer's RRSP contributions.
How does the tax treatment of capital gains, in the Canadian personal income tax, differ from the tax treatment of interest income? Are any of these differences consistent with the ( Haig-Simons ) comprehensive definition of income?
What would be the effect of allowing corporations to treat the costs of investment like ordinary expenditures, that is deduct them from their net revenue in determining their income for the purposes of the corporate income tax? Would it matter here how the investment was financed?