Changes in Taxation Level
The effect of a change in taxation level on total tax revenue depends on the good being investigated, and in particular on its price elasticity of demand. Where goods have a low elasticity of demand (they are price inelastic), an increase in tax or duty will lead to a small decrease in demand—not enough to offset the higher tax raised from each unit. Overall tax revenue will therefore rise. Conversely, for goods which are price elastic, an increase in tax rate or duty would lead to a fall in tax revenue.
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Famous quotes containing the words taxation and/or level:
“Every diminution of the public burdens arising from taxation gives to individual enterprise increased power and furnishes to all the members of our happy confederacy new motives for patriotic affection and support.”
—Andrew Jackson (1767–1845)
“There are old heads in the world who cannot help me by their example or advice to live worthily and satisfactorily to myself; but I believe that it is in my power to elevate myself this very hour above the common level of my life.”
—Henry David Thoreau (1817–1862)