Tax

• 100,000

• 50,000

• 50,000

• smaller

• consumers

• smaller

• producers

• $3000

• 1500

• elastic demand curve

Principles of taxation

• Benefits principle

  • Example: NJ’s fuel tax funds roads, bridges, and public transport

• Ability-to-pay principle

  • Example: US Federal tax on personal earned income

• Lump-sum or poll taxes

  • Example:

• regressive

• progressive

• regressive

• progressive

• regressive

• inelastic

• elastic

• consumers than on suppliers

• regressive

• benefits principle