Tobacco Taxation and Fairness: An Economic Perspective, Study notes of Agricultural engineering

Download Tobacco Taxation and Fairness: An Economic Perspective and more Study notes Agricultural engineering in PDF only on Docsity! 21 October Tobacco products are more inelastically demanded Reduction in quantity demanded w/ tax isn’t very large Cigarettes vs. Lamborghinis Same tax on both - $100K sales tax Height of the DWL triangle is the same for both The DWL is wider for Lambos More DWL when elastic goods are taxed Larger tax revenue comes from taxing necessities But is that fair? Taxing Lambos would be more fair, but would not raise as much money In Economics, there are a couple of principles that govern fairness E.g. taxation Benefits received principle E.g. toll bridge Those who receive the greatest benefits pay the highest taxes Ability to pay principle Those with the greatest ability should pay more To (at least partially) deal with the equity vs. efficiency problem Income taxes More income → more taxes More income → higher percentage