Discussion Board

Discussion Board 2

Chapter 8 (section 8-1) discusses the deadweight loss from various types of tax plans. How would you change the tax system to promote equality, efficiency, and/or economic growth?

You may want to look at revising our current system, or you may want to look at alternative systems such as the VAT in Europe.

Note: To earn full credit for this graded discussion, post at least two times. First, post your own thoughts. This post should be substantial (containing at least 200words).

Next, respond to the student’s discussion below. Be polite, professional, and thoughtful. These posts should contain at least 100words.

“The loss of total welfare because of taxes is what creates deadweight loss. When supply and demand are not in equilibrium, deadweight loss occurs and presents market inefficiency. For example, in our graphs used in previous course works when supply and demand are intersecting along with the price of good or services and the quantity of trades, this creates equilibrium which means everything is balanced. However, when taxes are imposed to create a higher price the point of the graph moves to a higher price point and moves to a lower quantity of trade, thus creating the demand valuing more than the cost to provide the supply of goods or services. In general taxes are what create deadweight loss, because it creates inefficiency in supply and demand. 

Since taxes are the main causes for deadweight loss, I would suggest to cut taxes. With taxes reduced this can create opportunities for consumers to save. This can also encourage productivity which will stabilize economic growth. However, I know that the problem cannot be solved with such a simple solution. There are many variables that affect the economy. As for the VAT system, I believe that it directly affects the consumer with higher prices.“

All posts need to be in your own words. Any use of outside resources requires that you cite and reference your sources in APA format.