ECN 104 Chapter Notes - Chapter 12: Tax Rate, Deadweight Loss, Old Age Security

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Introduction: one of the ten principles from chapter 1: A government can sometimes improve market outcomes: providing public goods, regulating use of common resources, remedying the effects of externalities, to perform its many functions, the government raises revenue through taxation, lessons about taxes from earlier chapters: A tax on a good reduces the market quantity of that good. The burden of a tax is shared between buyers and sellers depending on the price elasticities of demand and supply. Budget surplus: an excess of government receipts over. Budget deficit: an excess of government spending over government spending government receipts: provincial/territorial and local government: receipts. Provincial /territorial and local governments collect about 50% of taxes in the economy. Let"s look at how they obtain tax revenue and how they spend it. Equity: one tax system is more efficient than another if it raises the same amount of revenue at a smaller cost to taxpayers, the costs to taxpayers include:

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