This article LTG
Goldrock introduces you what the taxation effect and alternative effect of taxes ~
Various forms of taxation usually produces two economic effects: income effect (Income
Effect) and alternative effects
Effect).The taxation effect of tax refers to changes in people's income, that is, people have reduced the actual actual income due to taxation due to taxation.Government change tax policies will also change people's current income levels. The typical situation is that government tax increases have led people's income to relatively decrease, and tax cuts have relatively increased their income.The alternative effect refers to the adjustment of people's economic behavior, that is, people change the choice between the replaceable economic behavior in order to reduce the tax burden.
For example, the government's taxation of commodity courses may change people's choices between available products, and taxation for enterprises may change people's choices between available investment, so, and so on.The adjustment of people's economic behavior will inevitably cause changes in economic tax bases, leading to changes in personal income, corporate income, and government fiscal revenue.Therefore, government tax policies and their adjustments always bring the above two effects to the economy and society at the same time.
Of course, the only exception is to tax non -economic taxation, which will only cause income effects without an alternative effect.Because this kind of taxation has nothing to do with personal economic behavior, it only reduces the disposable income of taxpayers, will not cause changes in the economic behavior of taxpayers, and will not affect people's established economic choices.This tax that does not produce alternative effects is usually called neutral
TAX).
In real life, only one Lum-Sum
TAX).The tax is a one -time tax for the government for special aims. Under normal circumstances, this tax cannot be evacuated, and it does not distort on personal economic behavior.Except for the total tax of one -time tax, other types of taxes are non -neutral, which will affect people's decisions of production, consumption, savings, and investment, that is, they will change people's decisions of the use of economic resources.
Theoretically, all non -neutral taxes are distorted taxes (distorting
TAXES) has led to welfare losses or efficiency losses in the use of economic resources.This is because the addition of government tax will inevitably change the relative price system that was originally in a balanced state (product). As long as the relative price of goods changes, people will adjust their personal economic behavior, that is, the alternative effect of taxation will occur, that is, the alternative effect of taxation will occur.Essence
However, because the changes in the relative prices of economic and social at this time do not represent the changes in the relatively scarcity of economic resources, people's behavior adjustment is actually quite blind.It is further destroyed and it has some adverse effects on the improvement of national benefits
In other words, although the tax has made the government get a certain scale of fiscal revenue, if the national benefits they represent cannot fully compensate the national benefits caused by taxation, it indicates that the people must bear additional tax burden.This additional tax burden, also known as excess tax burden, is considered to be a net loss of national welfare caused by taxes.
