by Strigl
[Title Page and Publication Details]: Title page and publication metadata for Richard Strigl's work on the theory of tax shifting, published as part of a series edited by Hans Mayer. [Section I: Theoretical Foundations and the Static Economy Model]: Strigl establishes the methodological framework using the 'ideal-type' of a static economy characterized by economic rationality and free markets. He defines the circular flow involving production factors (labor, land, and capital), the role of entrepreneurs who sell at cost price without profit in a static state, and the continuous reproduction of capital. This section also includes a footnote referencing key literature on tax incidence by Seligman, Lindahl, and others. [Section II: Tax Shifting on Production Factors]: This section analyzes how taxes imposed on production factors affect market equilibrium. Using supply and demand curves, Strigl demonstrates that a tax increases production costs for the entrepreneur and decreases the net return for the seller, leading to a reduction in the total social product. He argues that the economic outcome is identical regardless of whether the buyer or the seller is legally responsible for paying the tax. [Section III: Elasticity and Boundary Cases in Tax Shifting]: Strigl discusses how the degree of tax shifting depends on the elasticity of supply and demand. He examines two boundary cases: one where supply is fixed (e.g., land), where the tax falls entirely on the seller's net revenue, and another where the price is fixed by external factors (e.g., world market prices for capital), where the tax must be absorbed as an increase in production costs. [Section IV: Taxes on Intermediate Production Stages and Consumption]: The author extends the analysis to taxes imposed at various stages of the production process and on final consumption. He argues that because production generally operates under the law of diminishing returns, any reduction in net revenue forces marginal producers out of the market, thereby reducing supply and increasing prices for consumers. The shifting process moves both forward to consumers and backward to suppliers of raw materials. [Section V: Income Tax and Labor Supply]: Strigl examines the prevailing view that income taxes cannot be shifted. While he agrees this is true regarding total purchasing power (as state spending replaces private spending), he suggests that if an income tax reduces real income enough to change the supply of production factors—such as workers demanding higher wages to maintain their standard of living—the tax can indeed be shifted onto entrepreneurs and eventually into product prices. [Section VI: Transition to Economic Dynamics]: The author transitions from the static model to economic dynamics, identifying two key differences: the existence of entrepreneurial profits (or losses) and the continuous formation and destruction of capital. He sets the stage for analyzing how taxes affect these dynamic elements specifically. [Section VII: Taxation of Entrepreneurial Profit]: Strigl argues that a tax on pure entrepreneurial profit cannot be shifted because it does not alter the marginal cost of production or the price-setting mechanism of the market. However, he notes that such taxes have significant 'remote effects' by reducing the capital available for reinvestment and weakening the incentive for competition, which normally drives the economy toward a static equilibrium of lower prices. [Section VIII: Taxation of Capital Formation, Rents, and Transfers]: This section explores taxes on capital formation, differential rents, and the transfer of assets. Strigl notes that taxing capital returns may either decrease or increase savings depending on social conditions. He concludes that taxes on differential rents (surpluses due to specific advantages) are generally not shiftable, while taxes on asset transfers act as a barrier to economic adjustment and the achievement of new equilibrium states. [Section IX: Summary of Static vs. Dynamic Tax Effects]: Strigl synthesizes the distinction between static and dynamic tax effects. In a static system, taxes tend to become cost components and are shifted. In a dynamic system, taxes may initially be absorbed by 'intermediate profits' (Zwischengewinne), but over time, as competition erodes these profits, the taxes eventually transform into cost elements. He also references the difficulty of empirically verifying these theories due to the complexity of real-world economic movements. [Section X: Legal Definitions vs. Economic Reality]: The final section critiques the discrepancy between administrative/legal tax definitions and economic categories. Strigl points out that a legal 'tax on income' or 'profit' often conflates distinct economic elements like interest, rent, and wages. He concludes that the primary task of tax theory is to translate legal tax bases into economic formulas to accurately predict their shifting and incidence.
Title page and publication metadata for Richard Strigl's work on the theory of tax shifting, published as part of a series edited by Hans Mayer.
Read full textStrigl establishes the methodological framework using the 'ideal-type' of a static economy characterized by economic rationality and free markets. He defines the circular flow involving production factors (labor, land, and capital), the role of entrepreneurs who sell at cost price without profit in a static state, and the continuous reproduction of capital. This section also includes a footnote referencing key literature on tax incidence by Seligman, Lindahl, and others.
Read full textThis section analyzes how taxes imposed on production factors affect market equilibrium. Using supply and demand curves, Strigl demonstrates that a tax increases production costs for the entrepreneur and decreases the net return for the seller, leading to a reduction in the total social product. He argues that the economic outcome is identical regardless of whether the buyer or the seller is legally responsible for paying the tax.
Read full textStrigl discusses how the degree of tax shifting depends on the elasticity of supply and demand. He examines two boundary cases: one where supply is fixed (e.g., land), where the tax falls entirely on the seller's net revenue, and another where the price is fixed by external factors (e.g., world market prices for capital), where the tax must be absorbed as an increase in production costs.
Read full textThe author extends the analysis to taxes imposed at various stages of the production process and on final consumption. He argues that because production generally operates under the law of diminishing returns, any reduction in net revenue forces marginal producers out of the market, thereby reducing supply and increasing prices for consumers. The shifting process moves both forward to consumers and backward to suppliers of raw materials.
Read full textStrigl examines the prevailing view that income taxes cannot be shifted. While he agrees this is true regarding total purchasing power (as state spending replaces private spending), he suggests that if an income tax reduces real income enough to change the supply of production factors—such as workers demanding higher wages to maintain their standard of living—the tax can indeed be shifted onto entrepreneurs and eventually into product prices.
Read full textThe author transitions from the static model to economic dynamics, identifying two key differences: the existence of entrepreneurial profits (or losses) and the continuous formation and destruction of capital. He sets the stage for analyzing how taxes affect these dynamic elements specifically.
Read full textStrigl argues that a tax on pure entrepreneurial profit cannot be shifted because it does not alter the marginal cost of production or the price-setting mechanism of the market. However, he notes that such taxes have significant 'remote effects' by reducing the capital available for reinvestment and weakening the incentive for competition, which normally drives the economy toward a static equilibrium of lower prices.
Read full textThis section explores taxes on capital formation, differential rents, and the transfer of assets. Strigl notes that taxing capital returns may either decrease or increase savings depending on social conditions. He concludes that taxes on differential rents (surpluses due to specific advantages) are generally not shiftable, while taxes on asset transfers act as a barrier to economic adjustment and the achievement of new equilibrium states.
Read full textStrigl synthesizes the distinction between static and dynamic tax effects. In a static system, taxes tend to become cost components and are shifted. In a dynamic system, taxes may initially be absorbed by 'intermediate profits' (Zwischengewinne), but over time, as competition erodes these profits, the taxes eventually transform into cost elements. He also references the difficulty of empirically verifying these theories due to the complexity of real-world economic movements.
Read full textThe final section critiques the discrepancy between administrative/legal tax definitions and economic categories. Strigl points out that a legal 'tax on income' or 'profit' often conflates distinct economic elements like interest, rent, and wages. He concludes that the primary task of tax theory is to translate legal tax bases into economic formulas to accurately predict their shifting and incidence.
Read full text