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ECON 3C03 Public Sector Economics: Taxation

FALL 2021

 

Course Description

This course explores topics in the economics of taxation. We will use tools from microeconomic theory to study and evaluate taxes in terms of their impacts on the distribution of income, efficiency and equity. Empirical techniques used by public economists to study the impacts of taxation on outcomes, such as labour supply and savings will also be introduced. These theoretical and empirical tools will be used to study income, consumption, capital and corporate taxation. The course will also introduce students to the Canadian consumption, personal income and corporate income tax systems.

Prerequisites

ECON 2G03, ECON 2X03 or ECON 2Z03.

Course Objectives

By the end of the course students should be able to:

· Describe the reasons why governments intervene in market economies

· Be familiar with the theoretical models of consumption, savings and labour supply used by public economists

· Explain the concept of tax incidence and describe how taxes affect incomes under different models and market structures

· Evaluate the effects of taxes on behaviour and efficiency

· Be familiar with the micro-econometric techniques used by public economists to study the effects of real-world tax policies

· Be familiar with the existing Canadian tax structure

· Evaluate the effects of the current Canadian tax system, as well as proposed tax alternatives, on equity and efficiency

Class Format

This is a virtual undergraduate course. The course content will be delivered through a mix of synchronous and asynchronous methods. The asynchronous delivery will consist of pre-recorded videos for each topic in the course (posted at the beginning of each week). Students will also be asked to complete short writing assignments based on the course material each week. There is also a synchronous component to the course. Each Monday from 12:30 pm to 1:20 pm EST, the instructor will hold a one-hour review lecture which will review the material from the prior week’s pre-recorded lecture videos. Also, each Thursday from 12:30 pm to 1:20 pm EST, the instructor will host a one-hour tutorial in which the instructor and students will work through examples and practice problems. The weekly tutorials are intended to supplement the pre-recorded lectures and will be recorded and captioned for students that are unable to attend ‘live’. The course will begin on September 7, 2021 and end on December 8, 2021 with a mid-term recess during the week of October 11, 2021 to October 17, 2021. The final exam will be delivered online/electronically during the examination period of December 9, 2021 to December 22, 2021.  The exact date of the final exam will be determined during the semester.  

What is expected of students

You are unlikely to do well in the course if you adopt a strategy that attempts to memorize the material, minimizes effort or crams study time until right before an assignment deadline or exam date. This is because the material in each module of the course builds upon the material in earlier modules.

I expect students to do will if they follow 5 simple steps:

1) watch all of the pre-recorded lecture videos;

2) actively participate in as many of the synchronous tutorial sessions as you can;

3) review all of the examples and complete all practice exercises on your own;

4) make an appointment with me to discuss any material you don’t understand (ideally, as soon as possible);

5) submit a short writing assignment each week.  

While these steps are easy to understand, following through with them regularly throughout the semester will require dedication and hard work. My philosophy to teaching is that both the instructor and the student get the most out of the course when the instructor is engaging and students are motivated to learn. I also hope to learn from you this semester; your feedback and questions are encouraged (especially during the synchronous sessions). Even though we are virtual this semester, I want to learn about who you are and what your academic and professional interests are. I want to help you learn in this course and ultimately succeed in the labour market.

Course Materials and Texts 

· Rosen, Harvey S., Jean-Francois Wen and Tracey Snoddon. (2016): Public Finance in Canada. McGraw-Hill Ryerson, Toronto, Fifth Edition.

This textbook is not required but is recommended. Although my lecture videos and slides and practice exercises will feature all of the material you will be tested on, students may find the textbook helpful for additional background reading and additional practice questions. Note that I will occasionally supplement my lecture slides with readings based on academic articles. These articles are available online through the university’s library web site.

Avenue to Learn

All course materials, including the course outline, announcements, lecture videos, lecture slides, practice exercises and grades, will be posted on the course Avenue to Learn page. Students are expected to check the ECON 3C03 Avenue to Learn course page regularly.

Students should be aware that, when they access the electronic components of this course, private information such as first and last names, user names for the McMaster e-mail accounts, and program affiliation may become apparent to all other students in the same course. The available information is dependent on the technology used. Continuation in this course will be deemed consent to this disclosure. If you have any questions or concerns about such disclosure please discuss this with the course instructor.

Course Evaluation – Overview

1. Participation – 5%, evaluated throughout the semester

2. Assignment 1 – 15%, due October 8, 2021

3. Assignment 2 – 15%, due November 26, 2021

4. Short writing assignments – 30%, due weekly but only the top 6 count towards final mark (5% each)

5. Final Exam – 35%, date to be announced

Course Evaluation – Details

Participation (5%), evaluated throughout the semester

Actively participating and engaging with the course material is the best way to learn and keep up with the course material. Participation marks will be awarded based on the attendance and active participation during the weekly synchronous sessions (both the review lectures and tutorials). To earn active participation marks, students must both regularly attend the virtual sessions and contribute to the learning environment by asking questions, responding to questions posed by the instructor and by participating in class discussions. If you cannot attend a review lecture or tutorial (e.g. because of illness or another conflict), please email the course instructor in advance.

Assignment 1 (15%), due October 8, 2021

Assignment 1 will be short-answer and (mathematical/graphical) problem based. The assignment will cover material from Chapters 1-3 and Chapter 14 of the RWS textbook. Assignment 1 is due at 5:00 pm EST on October 8, 2021. Students must submit their assignment electronically by uploading it to the course Avenue page. While I encourage you to talk to your classmates about the assignment, each student must submit their own original copy of the assignment.

Assignment 2 (15%), due November 26, 2021

Assignment 2 will be short-answer and (mathematical/graphical) problem based. The assignment will cover material from Chapters 15-19 of the RWS textbook. Assignment 2 is due at 5:00 pm EST on November 26, 2021. Students must submit their assignment electronically by uploading it to the course Avenue page. While I encourage you to talk to your classmates about the assignment, each student must submit their own original copy of the assignment.

Short writing assignments (30%), due weekly

The short writing assignments are designed to help reinforce your understanding of the course material and improve your writing and critical thinking skills. For each week, choose a topic from the course material (for that week) and either 1) write about that topic in your own words as if you are trying to teach it to a family member or another student in the class, or 2) if the topic is policy oriented, write an opinion article on the policy that presents the arguments for or against the policy.  

Each writing assignment you submit must be on a different topic than your previous submissions. Your writing assignment should be 1-2 pages (2 pages maximum) and can be either single spaced or double spaced. Students must submit their short writing assignments electronically by uploading them to the course Avenue page. Assignments for each week are due on Sundays at 11:59 PM EST.

Students are encouraged to submit a writing assignment each week to keep up with the course material, however only the top 6 writing assignments will count towards the final grade (5% each). As a result, unless you have a 5/5 on at least 6 assignments, you have an incentive to keep submitting an assignment each week. Writing assignments will be graded out of 5, with grades based on the demonstrated understanding of the topic, clarity of writing/presentation and critical thinking skills. In general, the market scheme will translate roughly to: D = 1/5, C = 2/5, B = 3/5, A = 4/5, A+ = 5/5.

All writing assignments will be checked for originality using the Turnitin.com database. This database will review assignments for textual similarity and the detection of plagiarism. In submitting their assignment, students will allow their assignments to be included as source documents in the Turnitin.com reference database, where they will be used solely for the purpose of detecting plagiarism. If you prefer not to use Turnitin.com, please make an appointment to meet with me before a deadline to discuss.

Final Exam (35%)

A final exam will be held during the 2021 Winter Term Final Examination Period (Thursday, December 9, 2021 to Wednesday, December 22, 2021) and will be worth 35% of the final course grade. The Office of the Register will schedule the date and time of the final exam and I will post this information to the course Avenue to Learn page as soon as it is available.

The final exam will be delivered online through the course Avenue to Learn page. The format of the final exam will be short-answer and problem-based. The final exam is cumulative but more weight will be placed on topics covered in the second half of the semester.

Tutorials

Practice exercises will be posted on the course Avenue to Learn page for each topic. These exercises are one of the best ways to prepare for the Assignments and the Final Exam. The instructor will take-up some (but not all) of the practice exercises during the tutorials each Thursday. The practice questions taken up in tutorial will be based on the lecture material from the previous week. For example, the questions taken up in tutorial in week 4 will be based on lecture material from week 3. Students are encouraged to attempt the practice exercises beforehand and actively participate in each tutorial by asking questions and responding to questions posted by the instructor. The virtual tutorials will be held virtual via Zoom; a meeting ID/passcode will be posted on the course Avenue page at the beginning of the semester and will be valid for all tutorials.

Course Policies

Grades

Grades will be based on the McMaster University grading scale:

MARK

GRADE

90-100

A+

85-90

A

80-84

A-

77-79

B+

73-76

B

70-72

B-

67-69

C+

63-66

C

60-62

C-

57-59

D+

53-56

D

50-52

D-

0-49

F

Grade Adjustment Techniques

I reserve the right to adjust marks upwards in order to standardize the median class grades. Marks will never be adjusted down (only up) using this procedure.

Submission of Assignments

Assignments 1 and 2 are due at 5:00 pm EST on the due dates listed in the course outline. The short writing assignments are due each week on Sunday at 11:59 PM EST. I will accept both hand-written and typed assignments as long as they are uploaded to the course Avenue to Learn page.

Late Assignments

The assignments and the final exam are not optional. A penalty will be applied to assignments that are not submitted by the due date. Each day of (unexcused) late submission results in a penalty of 5% (weekends are not excluded). This also applies to assignments sent by email, and in this case, the time of receipt of the email by the recipient is guarantor of the time of delivery.

Absences, Missed Work, Illness (MSAF)

McMaster Student Absence Form (MSAF): In the event of an absence for medical or other reasons, students should review and follow the Academic Regulation in the Undergraduate Calendar “Requests for Relief for Missed Academic Term Work”.

Note that the MSAF reporting system is only valid for 3 days following a missed evaluation. You cannot use the MSAF reporting system for the short writing assignments or the final exam because they are worth more than 24% of the final grade.

If you fail to turn in Assignment 1or 2 due to illness, you must report to their Faculty Office and provide the appropriate documentation. For more information, see https://socialsciences.mcmaster.ca/current-students/absence-form.

Students whose absence is excused (e.g. MSAF is accepted) will be required to complete a make-up assignment that will be similar to the original assignment. If your absence is excused, you are required to contact me as soon as possible to schedule a date to submit the make-up assignment.

Where to Get Help

Students are encouraged to email the course instructor or the TA for assistance with the course material. Office hours will be held virtually by appointment.

Calculators and iClickers

Only McMaster Standard Calculators (Casio FX 991 MS or MS Plus) will be allowed during the final exam. iClickers will not be used in the course.

Turnitin.com

Some courses may use a web-based service (Turnitin.com) to reveal authenticity and ownership of student submitted work. For courses using such software, students will be expected to submit their work electronically either directly to Turnitin.com or via an online learning platform (e.g. A2L, etc.) using plagiarism detection (a service supported by Turnitin.com) so it can be checked for academic dishonesty.

Students who do not wish their work to be submitted through the plagiarism detection software must inform the Instructor before the assignment is due. No penalty will be assigned to a student who does not submit work to the plagiarism detection software. All submitted work is subject to normal verification that standards of academic integrity have been upheld (e.g., on-line search, other software, etc.). For more details about McMaster’s use of Turnitin.com please go to www.mcmaster.ca/academicintegrity.

University Policies

Academic Integrity Statement

You are expected to exhibit honesty and use ethical behavior in all aspects of the learning process. Academic credentials you earn are rooted in principles of honesty and academic integrity.

Academic dishonesty is to knowingly act or fail to act in a way that results or could result in unearned academic credit or advantage. This behavior can result in serious consequences, e.g. the grade of zero on an assignment, loss of credit with a notation on the transcript (notation reads: “Grade of F assigned for academic dishonesty”), and/or suspension or expulsion from the university.

It is your responsibility to understand what constitutes academic dishonesty. For information on the various types of academic dishonesty please refer to the Academic Integrity Policy.

The following illustrates only three forms of academic dishonesty:

1. Plagiarism, e.g. the submission of work that is not one’s own or for which credit has been obtained.

2. Improper collaboration in group work.

3. Copying or using unauthorized aids in tests and examinations.

Academic Accommodation of Students with Disabilities

Students who require academic accommodation must contact Student Accessibility Services (SAS) to make arrangements. Academic accommodations must be arranged before classes or academic work begins, and for each term of study. Student Accessibility Services can be contacted by phone 905-525-9140 ext. 28652 or e-mail [email protected]. For further information, consult McMaster University’s Policy for Academic Accommodation of Students with Disabilities. 

Academic Accommodation for Religious, Indigenous and Spiritual Observances

Students who require academic accommodation due to an Observance must submit a RISO form to their Faculty office, electronically or in person, normally within ten working days from the beginning of each term in which they are anticipating a need for Accommodation. For further information, consult McMaster University’s Policy on Academic Accommodation for Religious, Indigenous and Spiritual Observances

Conduct Expectations

As a McMaster student, you have the right to experience, and the responsibility to demonstrate, respectful and dignified interactions within all of our living, learning and working communities. These expectations are described in the Code of Student Rights & Responsibilities (the “Code”). All students share the responsibility of maintaining a positive environment for the academic and personal growth of all McMaster community members, whether in person or online.

It is essential that students be mindful of their interactions online, as the Code remains in effect in virtual learning environments. The Code applies to any interactions that adversely affect, disrupt, or interfere with reasonable participation in University activities. Student disruptions or behaviours that interfere with university functions on online platforms (e.g. use of Avenue 2 Learn, WebEx or Zoom for delivery), will be taken very seriously and will be investigated. Outcomes may include restriction or removal of the involved students’ access to these platforms.

Copyright and Recording

Students are advised that lectures, demonstrations, performances, and any other course material provided by an instructor include copyright protected works. The Copyright Act and copyright law protect every original literary, dramatic, musical and artistic work, including lectures by University instructors

The recording of lectures, tutorials, or other methods of instruction may occur during a course. Recording may be done by either the instructor for the purpose of authorized distribution, or by a student for the purpose of personal study. Students should be aware that their voice and/or image may be recorded by others during the class. Please speak with the instructor if this is a concern for you.

Course Modification

The instructor and university reserve the right to modify elements of the course during the term. The university may change the dates and deadlines for any or all courses in extreme circumstances. If either type of modification becomes necessary, reasonable notice and communication with the students will be given with explanation and the opportunity to comment on changes. It is the responsibility of the student to check his/her McMaster email and course websites weekly during the term and to note any changes.

Courses with An Online Element

Some courses may use on-line elements (e.g. e-mail, Avenue to Learn (A2L), LearnLink, web pages, capa, Moodle, ThinkingCap, etc.). Students should be aware that, when they access the electronic components of a course using these elements, private information such as first and last names, user names for the McMaster e-mail accounts, and program affiliation may become apparent to all other students in the same course. The available information is dependent on the technology used. Continuation in a course that uses on-line elements will be deemed consent to this disclosure. If you have any questions or concerns about such disclosure please discuss this with the course instructor.

Extreme Circumstances

The university reserves the right to change the dates and deadlines for any or all courses in extreme circumstances (e.g., severe weather, labour disruptions, etc.). Changes will be communicated through regular McMaster communication channels, such as cMaster Daily News, Avenue to Learn and/or McMaster email.

Faculty of Social Sciences E-mail Communication Policy

Effective September 1, 2010, it is the policy of the Faculty of Social Sciences that all e-mail communication sent from students to instructors (including TAs), and from students to staff, must originate from the student’s own McMaster University e-mail account. This policy protects confidentiality and confirms the identity of the student. It is the student’s responsibility to ensure that communication is sent to the university from a McMaster account. If an instructor becomes aware that a communication has come from an alternate address, the instructor may not reply at his or her discretion.

Please include ECON 3C03 in the subject line and include both your full name and student ID in any emails you send to the instructor or the TA.

In general, email is not the best way to communicate questions about course material or the assignments. These types of questions should be asked during office hours. Consequently, the instructor will only respond to emails that deal with administrative questions (e.g. missing an assignment or a logistical question).

Online Proctoring

Some courses may use online proctoring software for tests and exams. This software may require students to turn on their video camera, present identification, monitor and record their computer activities, and/or lock/restrict their browser or other applications/software during tests or exams. This software may be required to be installed before the test/exam begins.

Advisory Statement on Course Outline Updates

Some of the details in this course outline may change. Please check Avenue to Learn for the most up-to-date information for this course. The course outline posted on Avenue to Learn will supersede previously published outlines until public course outlines are updated.

 

 

 


Course Schedule

Category

Topic

Readings [RWS indicates Rosen, Wen and Snoddon textbook]

Introduction

Introduction to Public Finance in Canada

RWS Chapter 1

Fundamentals of Welfare Economics

RWS Chapter 2

Cost-Benefit Analysis

RWS Chapter 3

A Framework for Tax Analysis

Taxation and Income Distribution

RWS Chapter 14

Taxation and Efficiency

RWS Chapter 15

Efficient and Equitable Taxation

RWS Chapter 16

The Canadian Revenue System

The Personal Income Tax

RWS Chapter 17

Personal Taxation and Behavior

RWS Chapter 18

Consumption Taxation

RWS Chapter 19

Taxes on Wealth and Property

RWS Chapter 20

 

Please read the following New York Times article:  saez-zucman-wealth-income-tax

The Corporation Tax

RWS Chapter 21