财政学课本习题答案（第8版）Chapter_21.doc

Chapter 21 – Fundamental Tax Reform: Taxes on Consumption and Wealth 1. a. The income tax is 50 percent, so Zach pays 50%*$10,000 = $5,000 in income taxes in the first period. In the second period, he earns $500 in interest (10% of savings = 10%*$5,000 = $500), so he pays taxes on interest of 50%*$500 = $250. The present value of Zach’s lifetime tax payments equals $5,000 + [$250/(1.1)] = $5,227.27. b. In the second period, Zach has savings and interest equal to $5,500. He can consume $3,667 in period 2 and must then pay 50%*$3,667 = $1,833.50 in consumption taxes. The present value of Zach’s lifetime tax payments is then equal to $5,000 + [$1,833.50/(1.1)] = $6,667. These calculations demonstrate the transitional problem in moving to a consumption tax because Zach had to pay high taxes during period 1 when he earned most of his income, and then had to pay high taxes during period 2 when he did his consuming. 2. The burden of the estate tax includes the resources used in estate planning and the effects of estate planning. Many families may alter their behavior in reaction to the estate tax and, if this results in less efficiency, the estate tax creates an excess burden that is not reflected by the number of taxable estates or the amount of tax revenue collected. 3. There is a fundamental confusion here. There is no reason to assume that the incidence of a general consumption tax (a VAT) will be the same as the incidence of a partial factor tax (corporate income tax). 4. a. For a fan giving a million-dollar ball to McGwire or Sosa, there would be a federal gift tax liability. Depending on the fans circumstances, it could reach $150,000 or more. The person receiving the gift owes no tax. b. If the fan keeps the ball, the fan would owe no tax now. But the ball would become part of his or her estate, taxable after death under the estate tax. c. The fan can avoid tax entirely by giving the ball to a charity, since he could entirely d