chapterchaptereighteeneighteen©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.Preparedby:Fernando&YvonnQuijanoTheTaxSystemandtheDistributionofIncome2of28©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER18:TheTaxSystemandtheDistributionofIncomeCHAPTER18PublicChoice,Taxes,andtheDistributionofIncomeFernandoQuijanoPreparedby:WhenBarackObamabecamepresidentinJanuary2009,heproposedanumberofchangestothetaxsystem.3of28©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER18:TheTaxSystemandtheDistributionofIncomeAfterstudyingthischapter,youshouldbeableto:UnderstandthetaxsystemintheUnitedStates,includingtheprinciplesoftaxationthatgovernmentsusetocreatetaxpolicy.Understandtheeffectofpriceelasticityontaxincidence.DiscussthedistributionofincomeintheUnitedStates,andunderstandtheextentofincomemobility.ShouldtheGovernmentUsetheTaxSystemtoReduceInequality?LEARNINGOBJECTIVES123Taxlawsaffecteconomicincentivesandeconomicactivity,andcanalsoaffectfairness.4of28©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER18:TheTaxSystemandtheDistributionofIncomePublicchoicemodelAmodelthatapplieseconomicanalysistogovernmentdecisionmaking.PublicChoice,Taxes,andtheDistributionofIncome5of28©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER18:TheTaxSystemandtheDistributionofIncomePublicChoicePOLICYLENADAVIDKATHLEENCancerresearch1st2nd3rdMasstransit2nd3rd1stBordersecurity3rd1st2ndVOTESOUTCOMECancerresearchversusmasstransitCancerresearchwinsMasstransitversusbordersecurityMasstransitwinsBordersecurityversuscancerresearchBordersecuritywinsHowDoWeKnowthePublicInterest?ModelsofVotingTheVotingParadoxTable18-1TheVotingParadoxDefinethepublicchoicemodelandexplainhowitisusedtoanalyzegovernmentdecisionmaking.18.1LEARNINGOBJECTIVE6of28©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbar...
