What if a tax is levied nominally on labour and capital?
Its effect is to force site F out of use, because it is no longer possible to earn a acceptable livelihood by working there. The marginal site then becomes site E, whose productivity is 20. The rental values of all of the other sites are reduced by 10 units, and it will be observed that the total rental values have fallen by the amount of the tax collected. Thus it can be said that the burden of the rent has fallen on the landowner. Total production is also reduced by the loss of site F. A more realistic description of the economy is instructive. Present taxes are partially a tax on rent because income from rent is not distinguished from income from other sources. But taxes levied specifically on labour and capital can still be said to come out of rent because of the effect of these taxes at the margin. Again, site F is forced out of use. If taxes are reduced, total rental values rise because the margin shifts. Since rents are the surplus over the marginal site, a shift in the margin a
Related Questions
- Im selling some rural acreage that has a structure on it that is occupied seasonally for living quarters. How will this affect the capital gains tax on the sale of this property?
- Why is my Year-End Supplementary Tax Information missing a capital gain/loss summary?
- What Is Capital Gains Tax on Real Estate?
