How To Calculate Government Revenue From Tax Economics

Because sales tax is paid to the government it is a liability not income.

How to calculate government revenue from tax economics. The total producer burden is 6 70 420. Tax revenue is the result of the application of a tax rate to a tax base. Calculate the amount of tax revenue collected by the government and the distribution of tax payments between buyers and. P 200 0 5q and p 0 5q.

This is calculated before any discounts are applied. Total gross revenue does not include any taxes paid for an item. Assume that the tax on beer is 20 per unit a unit is a carton of drinks assume the demand and supply functions for cartons of beers per week are. The curve assumes a parabolic shape.

Add each tax payment made during the legally defined tax collection period to arrive at total tax revenue. As the government increases the tax rate the revenue also increases until t. Calculate the total tax revenue in this economy by finding the area of the rectangle border. The consumer only pays a small percentage.

It suggests that at the initial point the origin when the tax rate is 0 there is no revenue for the government. We plot the tax rate on the horizontal axis and the government revenue from taxation on the vertical axis. They are 6 worse off. Thus to find out who carries the burden of a tax we have to calculate tax incidence.

For instance in 2013 the state of new jersey collected a total of 8 235 billion in sales and use tax revenues which was approximately 30 5 percent of the 27 billion the state government collected from all taxes and fees for the same period. Taxes are ranked according to the tax rate. Increases in tax base result in more socially acceptable increase in revenue than an increase in the rate which in turn in certain macroeconomic conditions could even backfire. This is the imposed tax per gallon of gas.

Write your answer at the bottom of the page and identify the specific color used to show total tax revenue. However who actually pays a tax does not depend on who the tax is levied on. The first part of the total tax revenue equation is 3 3 2 9. In economic theory tax incidence which refers to the distribution of a tax burden between buyers and sellers only depends on the elasticity of supply and demand.

If a boutique priced a blouse at 50 and it sold seven that puts total gross revenue for that product at 350. After the tax is paid to the government they are left with 14. Australian government has imposed a tax on beer. In this case the total tax revenue 7 70 490.

Determinants of price elasticity and the total revenue rule our mission is to provide a free world class education to anyone anywhere.