Economics of Taxation

5 Credit points

Short description

This module examines the effects of taxation. First, tax rates are discussed; it is shown how the degree of redistribution of a progressive tax rate can be measured and what consequences progression has, for example, for spousal taxation (spousal splitting) or the relationship between tax burden and inflation (bracket creep). The chapter on “tax incidence” explains how taxes can be passed on from suppliers to consumers (or vice versa) and how this changes with the market structure (e.g., monopoly) or the interaction between different markets (e.g., consumer and labor markets). The effects of taxes on economic behavior (labor supply, savings, financial risks) and the measurement of the costs incurred by taxes are the focus of the chapter “Behavioral and welfare effects of taxation.” The concluding chapter introduces the widely used concept of “efficient taxation” and explains the consequences this has, for example, for the taxation of different consumer goods, types of income, or the tax treatment of travel expenses to the workplace.

Qualification Goals

Students understand the key topics and analytical tools of public economics at the intermediate level. They are familiar with microeconomic methods for analyzing the allocational and distributional effects of income and consumption taxes. They know how to apply these skills to specific topics in public finance.

Content

Distributional and allocational effects of income and consumption taxes (e.g. progressive taxation, tax incidence, behavioral effects of taxation, optimal taxation).

Components and semester hours per week

Lecture (2 semester hours per week) and tutorial (1 semester hour per week)

Frequency

Winter semester

Examination performence

Written examination  (60 minutes)