Taxing the Rich

One important lesson we learn in economics is that the government’s projected tax revenue differs from actual tax revenue received. To summarize (begin by picturing a Supply and Demand curve in your heads):

1. Any projected tax revenue takes into account the quantity before the tax is placed.
2. Placing the tax on any product will shift the supply curve to the left.
3. Identify the new equilibrium quantity and you will find it has decreased.
4. Find the new tax revenue (quantity times the tax) and it will be smaller than the pre tax revenue.

Here is some evidence of taxing high end labor. Is this a viable and desirable alternative?

Update: For a different perspective regarding taxing the wealthy here is an interesting article by a well known economist.

Cigarette Taxes

The smoker tax in the news again. Tax revenue is a function of (in part) the Elasticity of Demand. Who is paying the burden of this tax?

What Country has the Highest Total Tax Revenue as a % of GDP?

Dowload the Economic and Financial Indicator to view which countries are collecting nearly half their GDP as taxes.

Is Taxing the Uninsured Justifiable?

Greg Mankiw's blog, Taxing the Uninsured, provides insight regarding Obama's new health plan. Click here to see the economist perspective.

Which states get our Federal Taxes?

Interested in seeing how federal taxes are distributed per state: You can download the document from here (it’s not very large):