lump-sum taxes

Lump-Sum Tax

A tax in which the taxpayer is assessed the same amount regardless of circumstance. An example of a lump-sum tax is a $55 fee on all employees who work in a township. Another example is tag fees on vehicles, which are the same regardless of the income of vehicle owners. Lump-sum taxes are regressive, meaning persons with lower income pay more as a percentage of their income.

lump-sum taxes

the taxes that raise revenue for the government without distorting resource allocation patterns. INDIRECT TAXES have a distorting effect because they cause consumers to rearrange their consumption patterns, and this rearrangement represents a loss to consumers without any corresponding gain to the government. Similarly, INCOME TAXES can distort choice patterns in affecting the choice between work and leisure. In practice, there are few taxes that do not affect resource allocation other than poll taxes, which simply levy a tax per head of population. See TAXATION, INCIDENCE OF TAXATION, PRINCIPLES OF TAXATION.
References in periodicals archive ?
Without loss of generality, we assume that government expenditure [G.sub.t] is funded by non-distortionary, lump-sum taxes [T.sub.t] = [G.sub.t], t = 0,1.
In the absence of an ability to use lump-sum taxes, the optimal commodity tax structure is provided by Ramsey (1927).
A critical feature of the planning problem we study is whether the planner can redistribute resources by means of lump-sum taxes or transfers.
Previous work [Ellis and Auernheimer, 1996, "Stabilization under Capital Controls," Journal of International Money and Finance 15(4), 523-33] showed the private sector smoothes consumption prior to an anticipated fiscal reform consisting of an increase in lump-sum taxes under a fixed exchange rate and no capital mobility.
The cost of the imported good (i.e., [P.sub.g]g), used for public pollution abatement, is financed through the emission tax revenue [i.e., -t[R.sub.t](t, K)] and lump-sum taxes (7).
(2) When the private insurance market suffers from an adverse selection problem, the government may deal with the market failure by providing a simple lump-sum taxes and subsidies system (Crocker and Snow, 1985) or a linear premium subsidy (Selden, 1999).
Neoclassical growth models predict positive growth effects throughout the entire transition path after a reduction in capital or labor tax rates when lump-sum taxes or transfers are used to balance the government budget.
Such a policy is feasible since the ratio of lump-sum taxes (or transfers, if T is negative) to output can be readily shown to be less than one in absolute value.
Likewise, in contrast to the monetary policy literature with lump-sum taxes, the authors find that, in their model, a government spending shock creating fiscal stress affects the optimal path of inflation and the output gap.
These results are derived under the assumption that the government can employ lump-sum taxes to balance its budget.
If our model is expanded to include lump-sum taxes, increases in G financed by lump-sum taxes borne only by the donor will completely crowd out donations.
A well-known conclusion in the theory of international trade is that having tariffs is not an optimal policy for a small country unable to influence terms of trade if collection costs of taxes can be disregarded and lump-sum taxes or indirect taxes on all commodities are possible.