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Tax Yield

Tax yield refers to the amount of revenue raised by any particular tax. Principles of taxation suggest that a good or fair tax should have a broad base (the object that is taxed) and a low rate to minimize inefficiencies created by the payment of the tax on economic behavior. The yield from any tax is a function of the rate of taxation times the base. The yield of any tax will therefore change as the rate or the base (or both) move up or down. As a result, efforts to exempt certain portions of a tax base from taxation (e.g., income tax deductions, sales tax exemptions, or homestead exemptions to property value subject to property taxation) reduce the yield of the tax. This entry ...

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