What is the flypaper effect?
What is the flypaper effect?
The flypaper effect results when a dollar of exogenous grants-in-aid leads to significantly greater public spending than an equivalent dollar of citizen income: Money sticks where it hits. Viewing governments as agents for a representative citizen voter, this empirical result is an anomaly.
What is the flypaper theory of tax incidence?
The flypaper theory of tax incidence is a pejorative term used by economists to describe the assumption that the burden of a tax, like a fly on flypaper, sticks wherever it first lands. Economists point out several flaws with the assumption: it ignores the elasticity of goods; and.
What is the flypaper effect quizlet?
Flypaper theory. The flypaper theory of tax incidence is a pejorative term used by economists to describe the assumption that the burden of a tax, like a fly with flypaper, sticks wherever it first lands.
What is the benefits principle of taxation?
Under the benefit principle, taxes are seen as serving a function similar to that of prices in private transactions; that is, they help determine what activities the government will undertake and who will pay for them.
Is a lump sum tax regressive?
A lump-sum tax is one of the various modes used for taxation: income, things owned (property taxes), money spent (sales taxes), miscellaneous (excise taxes), etc. It is a regressive tax, such that the lower the income is, the higher the percentage of income applicable to the tax.
What does it mean if a tax system is efficient quizlet?
-an efficient tax system is one that imposes small deadweight losses and small administrative burden. Deadweight Losses.
What are the 3 principles of taxation?
Efficiency can be measured against three standpoints: administrative costs, compliance costs and excess costs. These three relate to the cost of operation of the tax system, to its flexibility and certainty.
What are the four principles of taxation?
In The Wealth of Nations (1776), Adam Smith argued that taxation should follow the four principles of fairness, certainty, convenience and efficiency. Fairness, in that taxation, should be compatible with taxpayers’ conditions, including their ability to pay in line with personal and family needs.
What is deadweight loss of taxation?
Deadweight loss of taxation measures the overall economic loss caused by a new tax on a product or service. It analyses the decrease in production and the decline in demand caused by the imposition of a tax. It is a lost opportunity cost.
What are the 3 characteristics of effective taxation?
A good tax system should meet five basic conditions: fairness, adequacy, simplicity, transparency, and administrative ease.
What are the three criteria for effective taxes?
The three criteria for effective taxes are simplicity, efficiency, and equity.
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