Deadweight Loss Of Taxation
 |
Definition of 'Deadweight Loss Of Taxation'A loss of economic well-being imposed by a tax. The loss occurs because taxation makes the taxed good or service less attractive, reducing individuals' desire to purchase that product. Furthermore, taxation reduces incentives to work beyond a certain point, causing individuals to prefer to take additional leisure time. The tax also causes taxpayers to suffer financially and/or to change their behavior to avoid or reduce the burden of the tax. |
 |
Investopedia explains 'Deadweight Loss Of Taxation'Such outcomes create a loss to society because the money collected as a tax could have been used in a more economically productive way, as could the time individuals spent on their tax-avoiding behavior and the time and money spent to impose and collect the tax. The more the demand and supply of a good or service change in the face of a tax, the greater the deadweight loss of taxation. |
Related Definitions
Articles Of Interest
-
Taxing Times For Divorced Parents
Find out how to deal with the tax issues that arise for divorced parents with dependent children. -
Tax Tips For The Individual Investor
We give you seven guidelines to help you keep more of your money in your pocket. -
10 Money-Saving Year-End Tax Tips
Getting organized well before the deadline will curb your frustration and your tax liability. -
How International Tax Rates Impact Your Investments
International investors need to be aware of the staggering correlation between tax rates and economic performance. -
Weighing The Tax Benefits Of Municipal Securities
Find out how to determine whether the tax exemption offered by "munis" benefits you. -
7 Ways To Avoid Self-Employed Tax Penalties
If you follow these methods for calculating estimated tax payments, you could minimize your chances of incurring penalties. -
Avoid Capital Gains Tax On Your Home Sale
If you have property to sell and want to avoid capital gains tax, a Section 1031 exchange may be the answer. -
The Nash Equilibrium
Nash Equilibrium is a key concept of game theory, which helps explain how people and groups approach complex decisions. Named after renowned mathematician John Nash, the idea of Nash Equilibrium ... -
Forces Behind Interest Rates
Get a deeper understanding of the importance of interest rates and what makes them change. -
Leading Economic Indicators Predict Market Trends
Leading indicators help investors to predict and react to where the market is headed.
Free Annual Reports