Who Pays the Tax?

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Who bears the burden of a tax? Buyers or sellers? Why is it that the more elastic side of the market pays a smaller share of a tax? Again, we’ll apply what we know to the example of Social Security taxes and also look at the health insurance mandate as a part of the Affordable Care Act. Who pays for the mandate? The employers or the workers? We’ll also look at supply and demand of labor. Is the demand for labor more elastic than the supply?
Microeconomics Course: mru.io/ov9
Next video: mru.io/o9s
Help us caption & translate this video! amara.org/v/GCs3/
00:00 Who Pays the Tax?
00:28 The Economic Incidence
00:53 The Burden of a Tax - Inelastic Supply
02:35 The Burden of a Tax - Elastic Supply
03:17 Elasticity = Escape!
05:21 Example - Social Security Taxes
07:43 Example - Health Insurance Mandates

Опубликовано:

7 авг 2024

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Комментарии : 53

@MarginalRevolutionUniversity Год назад

Continue learning with practice questions: mru.io/t29

@jamessnell4756 8 лет назад

Hi, thankyou for doing these videos, they are honestly fantastic. In this one I have noticed a mistake which i would recommend you edit with a citation so as not to confuse students. At 2:40 the supply curve is called "very inelastic" when actually it is the opposite. It is very elastic. To understand taxation, students must build off these original elastic/inelastic supply/demand theories, so please change the text to avoid any confusion. Thanks for your hard work.

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@Braxton Makai instablaster :)

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@junkmail4613 4 года назад

2:38 You said the supply was "VERY INELASTIC", but we see a very shallow slope on supply, and we see a much more inelastic, (like a brick wall) STIFF RIGID STEEPLY SLOPED demand curve. Oh I see James Snell corrected you 3 years ago, but I'll leave my comment, so I get "Brownie Points" from the teacher!

@a010aa9 4 года назад

These are absolutely great! Among the best material out there! So thankful I found you guys, blessings to you!

@luxurymuslimah 8 лет назад

omg, this was confusing in my text, and you have made it so simple in a matter if 10 minutes

@MarginalRevolutionUniversity 8 лет назад

+jayla kord That's what we want to hear! Glad you're finding our videos helpful for your coursework. :D -Meg

@Bbb78651 6 лет назад

this is so important thank you!

@scroogietw6878 7 лет назад

Very good!

@zeweilei9944 5 лет назад

Hi, thank you for making these marvelous videos. But do you mind to make video about the practice questions on this section? I got really confused on some of the answers, and there are no explanations.

@MarginalRevolutionUniversity 5 лет назад

That is coming! We do have some "office hours" videos you can see here (more on the way): ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-gudArsau8pU.html -Roman

@denif6903 Год назад

There is a mistake in what you said during the video that made me bang my head against the wall at why am I not understanding it. At 2:38 you say that the supply curve is very inelastic, while it's very elastic. Instead of taking 9 minutes to figure out the video, it took me like 20 😂

@CF-tk4jk 4 года назад

Bravo! great

@lessonsarchived8527 2 года назад

Thank you.

@harvirgill4304 3 года назад

Are there examples of a very elastically supplied good and the reasons as to why it's so elastically supplied; meaning a good with very little costs and can move around inputs easily. There's not many general goods/services I can think of an example that would have inputs that could be used elsewhere unless we're talking about monopolies (which we have yet to cover) as their input and output supply is so vast that their supply is therefore very elastic. Just a brainstorm of me trying to wrap my head around an elastic supply but if anyone can add anything to clear up what I'm trying to figure out it'd be helpful. Thanks.

@harvirgill4304 3 года назад

Is there somewhere I can get more examples of a markets with an elastic supply? Examples of a good that has resources that can be used in other industries.

@MrDbolton1 7 лет назад

Now if only people could understand that the whole free health care and education would probably be levied through "unseen" payroll tax increases on the employers...People often forget how important elasticity is !!

@blubbfisch98 7 лет назад

I think most people don't even know there is something like elasticity

@venatortheanimefan4526 2 года назад

That's why you need union to make sure the tax burden falls on the employer not employee.

@doseoffaiyaz Год назад

@@venatortheanimefan4526 And what happens when the tax burden falls on employers? Oh there you go again... no jobs or at least lack of jobs! Maybe the key is to have more economists in government positions and limit government intervention! Only let the government intervene in places where the benefits enormously outweighs the costs!

@venatortheanimefan4526 Год назад

@@doseoffaiyaz or you could make the employer and employee the same thus eliminating this issue.

@doseoffaiyaz Год назад

@@venatortheanimefan4526 What does that even mean?

@siddhantahuja5384 2 года назад

Can anyone tell where I can find the answers to the practice questions?

@ThatoFX Год назад

I tried being subjective and employed deductive reasoning to answer the practice questions and I got 6/10 I tried again, this time i was completely logical and drew multiple graphs on the side to build my case, and I still got 6/10. I feel like in economics there's no right or wrong answer when we're mostly speculating

@MrHumatang 3 месяца назад

the practice questions are fucking hard and I don't understand why

@santipriya9639 3 месяца назад

At 2.44 some mistake occurred at the supply curve it sounds inelastic* please correct the word it should be more elastic*

@ThePeterDislikeShow 4 года назад

So what is the real benefit of splitting social security taxes into two parts? Is it to deter cheating?

@MrHumatang 3 месяца назад

the videos are great but the practice questions leave me more confused with no explanation for why I am wrong.

@ahmedmohamudmohamed2374 6 лет назад

Thank you. [but what about if both supplier's and demanders have more elastic]. √Who pays the most tax?

@Boristien405 5 лет назад

Ahmed Mohamud - if they have the same respective elasticities, then they spilt the difference in half. At equilibrium, the tax is almost always split evenly amongst the suppliers and consumers

@ahmedmohamudmohamed2374 5 лет назад

@@Boristien405 thanks dear . do you mean both buyers and sellers share the burden of the tax? If so, how are they able to maintain such this market and pay tax on this goods because these goods have more elastic means both buyers and sellers have more perfect substitution. In addition, consumers have another substitute goods to consume while producers also have another substitute goods to produce efficiency and effectively.

@Boristien405 5 лет назад

Ahmed Mohamud - Yes, buyers and sellers almost always split the tax burden (incidence) evenly. For example, if there’s a $20 tax placed on hotel rooms, suppliers will have to lower their prices to keep enough customers. So if a room is already $50 before tax, the price will go to $40 before tax and $60 after tax. Now, the suppliers make $10 less than they normally would and the customers pay $10 more than they normally would. They split the tax burden evenly. This is the most common scenario when the market is at equilibrium and a tax is levied on either a buyer or seller.

@FyterianTV 5 лет назад

So no backwards imputation of the sales tax to the owners of original factors? 0.o~

@BrusselBelgie Год назад

What happens on a graph when the governement reduces excise tax ?

@brindleyadolphus4905 3 года назад

2:38 Inelastic supply curve? are u sure about that? Oh James Snell and Junk Mail has noticed too. Guess its a mistake after all

@wj7660 4 года назад

Sorry , I don't understand the practice questions in this episode

@brindleyadolphus4905 3 года назад

Ya'll should head to Jacob Clifford youtuber if ya'll wanna pass economics in a very fun way

@ThePeterDislikeShow 4 года назад

You misspoke, it's the Unaffordable Sick Act.

@cellgrrl 7 лет назад

For a total novice on this topic, you are going to have to define terms, I stopped watching after 45 seconds. There were two words whose context in this topic made no sense.

@MarginalRevolutionUniversity 7 лет назад

Thanks for the feedback. Which terms were confusing? -Roman

@Chironex_Fleckeri 7 лет назад

Marginal Revolution University the video itself is fine, it's great in fact. I think they're confused because it is, however, unclear if unfamiliar with elasticity of s/d. perhaps make the videos more sequential (or at least more obvious what order to watch them)