Question

Compare a progressive income tax with a corporate tax under the 6 criteria for a good tax. Make sure to include a discussion under all 6 criteria, including a discussion about the excess burden of the tax under efficiency and the level of cheating. Make sure to include some of the changes in the recent tax bill and include all relevant graphs.

Answer 1

Parameters for Consideration	Progressige Income Tax	Corporate Tax
Ease of filing	Filing Income taxes returns is easy using online portals	Corporate taxes are easier overall for corporates
Total Time for Returns	Returns processed in 30 to 60 days	Returns processed in 90 days
Variance across States	Small variance due to State laws and state taxes	Universal across USA
Positive Implications	Overall lower income individuals get higher benefits	Great cost savings as taxes are rationalised and input tax credit availability makes higher profitability
International benchmarking	Higher than China and India	Lower than China and India
Tax understanding for customers	Tax filing is easier but understanding tax brackets for investment is cumbersome	streamlined taxes amke very easy for corporate customers

All in all the verdict for progressive income taxis that it is mediocre tax while corporate tax is regarded asGoof Tax in USA.

Under efficiency, we see corporate chargeexcess taxes on certain goods like Cigarette and soft drinks which create an additional burden on customer as taxes by Government gets passed onto customers and ultimately the consumption decreases as aimed by Government.

PAGE NO. DATE: PRICE ($) AXYC = Deadweight Loss of 208 --- 116 108 byty AABC = Deadweight Loss Due to 10$ Tax 100+ 800 900 1000 QUANTITY AXYC = (116-100) X clooo -800) = 3200 A ABC = (108 -10o) x(1000-900) = 800

The excess burden of tax creates the deadweight losses as mentioned in above diagram.

In recent tax bill, the government has proposed rationalised taxes and availability of input tax credit which thus lower burden of taxes onto customers. Also corporate taxes been cut by Trump administration to lower costs and passing it into customers.