Tax Plan Essay

This article is about a proposed tax plan amendment by Sen. Rob Portman. This amendment to the tax plan would decrease the excise tax on American-made beer and distilled spirits. An excise tax is a tax imposed on a particular good or service. What this tax amendment will do is increase producer revenue, which is the raw amount of money they make from selling their good. The government uses taxes as a source of revenue, therefore, this amendment will decrease the government's revenue. Decreasing the tax will also increase producer surplus, which is the price received by firms for selling their minus the lowest price at which they are willing to produce the good. This decrease in tax will help economic growth for this industry and help create

Supply is the amount of good that producers are willing and able to produce at different prices, demand is how much consumers are willing and able to buy at different possible prices. The tax on alcohol affects the supply of the alcohol, since the tax is paid for by the producer. The area between the two supply curves is the amount of the tax reduction. The supply shifts rights after the tax reduction because the producers have to pay less money to make the same amount of alcohol. The point where the demand curve intersects the supply curve is called the equilibrium point(where quantity demanded= quantity supplied). The tax reduction changes where the equilibrium point is to a more efficient place for both the consumer and producer. It is more efficient because the producer will be able to produce more alcohol and sell more at a lower cost, and the consumer will be able to buy more at a cheaper price. In this diagram the period 1 line represents the supply plus the original tax on the good. The period 2 line represents the supply plus the new tax. Although the producers and consumers are better off from the new tax, they are not as good off as they would be without any tax at all. Having a tax placed on a product makes producers and consumers worse off, while making the government better off. The government may choose to place a tax for many reasons. The government will place taxes to

The proposed amendment would also help the market for alcohol by allowing there to be a higher quantity of alcohol for a lower price. A tax reduction would allow the producers of american made beers and other drinks to produce more, since they will not have to pay as much money to the government. Since they don’t have to pay as much money to the government they are able use the money they save to produce more beer and gain more money. The more the government lowers the tax the more the market will produce and the more the price will lower to the point it was before the tax. Having the tax decreased would also benefit the consumers in the market. The consumers are better off because they will be able to buy more product at a lower price than before at the original tax. Taxes in general, are paid for by the producers, but it still negatively affects the consumers. Taxes negatively affect consumers because producers will produce less product and the price of the good will increase when a tax is imposed or raised. By decreasing the tax consumers will be positively