Welfare Loss Of Taxation

Dictionary Says

Definition of 'Welfare Loss Of Taxation'


The decreased economic well-being caused by the imposition of a tax. Taxing any product or activity makes it less attractive and gives people less incentive to purchase or undertake it. Taxpayers not only suffer from having less money because of the tax, they also suffer because the tax may change their behavior. Taxation results in deadweight loss which results in the economy functioning below optimal levels.
Investopedia Says

Investopedia explains 'Welfare Loss Of Taxation'


The market inefficiency that occurs when people change their behavior to avoid a tax creates a loss to society. A tax may cause individuals to buy less than they would prefer or to buy a different product or service than they really wanted. A tax can also cause workers to take additional leisure time rather than to work more when they know they will lose 35% of any additional dollar they earn to taxes. The higher the tax, the greater the welfare loss of taxation.

comments powered by Disqus
Hot Definitions
  1. Chicago Mercantile Exchange - CME

    The world's second-largest exchange for futures and options on futures and the largest in the U.S. Trading involves mostly futures on interest rates, currency, equities, stock indices and agricultural products.
  2. Private Equity

    Equity capital that is not quoted on a public exchange. Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity.
  3. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  4. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  5. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  6. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
Trading Center