A person or business with a lower income will have to devote a larger portion of their income to the lump sum tax. Since lump-sum taxes are the same rate regardless of income, they can affect those with a lower income more. Figure 1 shows us how a $100 lump sum tax can take up a significant portion of a low income making the tax burden high, while taking up a smaller portion of a higher income, lowering the tax burden there. 1 - Lump Sum Tax as a portion of Incomeįigure 1 pictures how a lump sum tax burdens taxpayers differently and affects their level of disposable income.

The revenue from the lump sum tax will be $100 every month.įig. It does not matter if the shop is open one day or every day that month, if fifty people buy something or no one does, or if the shop has 20 square feet or 20,000 square feet. Each shop must pay a $10 fee to operate every month.

Measuring Domestic Output and National IncomeĪ lump sum tax rate is a tax that is a constant value and its revenue remains the same across all levels of GDP.Ī lump sum tax will yield the same amount of revenue regardless of GDP because it does not increase or decrease with the quantity produced.Sources of Revenue for State Government.Sources of Revenue for Local Government.Monetary Policy Actions in the Short run.Long-Run Consequences of Stabilization Policies.Expansionary and Contractionary Fiscal Policy.Factors Influencing Foreign Exchange Market.Comparative Advantage vs Absolute Advantage.Expansionary and Contractionary Monetary Policy.Equilibrium in the Loanable Funds Market.

Flat tax vs proportional tax