Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 6: Q. d (page 133)

Why is there always a difference between static analysis and dynamic analysis of tax changes?

Short Answer

Expert verified

Yes.

Step by step solution

01

Step1. Given information

Tax changes impacts static and dynamic analysis differently.

02

Step2. Explanation

Static analysis merely takes into account the change in tax. But dynamic, as the word suggests, is broader in sense. It takes into account not just the change in tax, but also the change in the population base which is taxed corresponding to the change in tax.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Explain how the taxes government levy on purchases of goods and services affect market prices and equilibrium quantities.

How could the legal expenses incurred in establishing rights to assess remote sales and the costs that states incur in collecting such taxes cut further into dynamic analysis estimates of the net revenue gains to states from implementing the taxes ?

Given that in recent years, the governments of many nations have been reducing corporate income tax rates in relation to the US rate (which remains one of the world's highest), is the US tax base shrinkage likely to slow down or speed up? Explain.

To raise funds aimed at providing more support for

public schools,astate government has just imposed

aunit excise tax equal to\(4for each monthly unit

of wireless phone services sold by each company

operating in the state.The following diagram

depicts the positions of the demand and supply

curves for wireless phone services before the unit

the excise tax was imposed. Use this diagram to deter

mine the position of the new market supply curve

now that the tax hike has gone into effect.

a.Does imposing the \)4-per-month unit excise tax

cause the market price of wireless phone ser

vices to rise by\(4per month?Why or why not?

b.What portion of the \)4-per-month unit excise

tax is paid by consumers? What portion is paid

by providers of wireless phone services?

If average income tax rates paid by lowest income taxpayers were increased to equality with those paid by the highest income taxpayers, would the US income tax system more or less progressive ? Explain your reasoning .
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free