Friday, April 16, 2010

Taxation and Income Inequality


Students shall be able to

  1. Differentiate between the benefits-received and ability-to-pay principles of taxation.

  2. Identify which taxes are progressive, proportional, and regressive.

  3. Describe how elasticities of demand and supply are related to the incidence of a sales or excise tax.

  4. Explain the relationship between the elasticities of demand and supply and the efficiency loss of a particular tax.

  5. Describe the probable incidence of the personal income tax, corporate income tax, sales and excise taxes, and property tax.

  6. Relate the results of studies with regard to the effect of the U.S. tax and transfer systems on income distribution.

  7. Explain how a Lorenz curve is used to describe income inequality.

  8. Explain the broadened concept of income, which includes the effects of taxes and transfer payments, and how this affects the extent of inequality of income and poverty in the U.S.

  9. Discuss the impact of income mobility on income distribution data.

  10. List seven causes of an unequal income distribution.

  11. State and evaluate the cases for and against income inequality, using the equality vs. efficiency argument.



  1. Students shall take notes on selected portions chapters 31 & 34 in McConnell & Brue.



  1. Take notes on selected portions of chapters 31 & 34 in McConnell & Brue. [Click here for the online PowerPoint for chapter 31 (slides 38-68); click here for chapter 34 (slides 1-35).]



Monitor and adjust as necessary.