ECON1002 Lecture Notes - Lecture 16: Pigovian Tax, Externality, Making Money
Document Summary
Taxation as identified by libertarians is something the government collects by force. Any time we collective revenue it will anyway be inefficient so we need to make sure it is collected well and is spent on something we need. Pigouvian taxes (which improves efficiency) is contrast are not distortionary because they correct for a negative externality. All other taxes have some distortionary effects and impose a. Taxation is the price we pay for a civilisation society. The tax graph: taxes are graphed in a similar manner to subsidies, except that the wedige is on the left hand side of the equilibrium. Distorted ability of the price to communicate benefits and costs. A tax you pay per window in a house. Tax rate rises per certain numbers of windows. Why would you have a window tax: in the context of the 1670s monitoring taxation was very difficult - you can"t hide your windows.
