Authors libby rittenberg 819

Source: CBO, Effective Federal Tax Rates under Current Law, 2001 to 2014, August, 2004, Table and Table A-1 (adjusted by authors using CBO assumptions concerning rates of growth of income and households) Numbers of households not add up to total because of excluded categories Quintiles contains equal numbers of people KEY TAKEAWAYS  The primary principles of taxation are the ability-to-pay and benefitsreceived principles  The percentage of income taken by a regressive tax rises as income falls A proportional tax takes a constant percentage of income regardless of income level A progressive tax takes a higher percentage of income as taxes as incomes rise  The marginal tax rate is the tax rate that applies to an additional dollar of income earned  Tax incidence analysis seeks to determine who ultimately bears the burden of a tax  The major types of taxes are income taxes, sales taxes, property taxes, and excise taxes  Buyers bear most of the burden of an excise tax when supply is relatively elastic and when demand is relatively inelastic; sellers bear most of the burden when supply is relatively inelastic and when demand is relatively elastic  The federal tax system in the United States is progressive TRY IT! Consider three goods, A, B, and C The prices of all three goods are determined by demand and supply (that is, the three industries are perfectly competitive) and equal $100 The supply curve for good A Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 819