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 ?
In the absence of an ability to use lump-sum taxes, the optimal commodity tax structure is provided by Ramsey (1927).
In the absence of intergenerational redistribution through lump-sum taxes and transfers, the constrained efficient competitive equilibrium requires optimal distortions on relative prices.
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.
We also allow governments to use lump-sum taxes to finance public pollution abatement.
Even in the special case in which Weisbach's method is properly applied, the method assumes that lump-sum taxes as well as income taxes will be employed.
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.
Governments have many tax tools at their disposal to redistribute wealth from one segment of the population to another, such as income, sales, and lump-sum taxes (for example, setup fees for corporations).
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.