Principles of Economics, Foldvary.
Mankiw, Chapter 8, the costs of taxation.
By "welfare" in economics we mean the well-being of the people, including psychic benefits.
Economic welfare can be measured by the consumer surplus.
A tax on a produced good shifts up the supply curve by the amount of the tax.
We move up along the demand curve.
The result is a higher price and lower quantity demanded.
The tax wedge: The difference between the price paid by the buyer and that received by the seller after paying the tax.
The tax revenue is the quantity times the tax wedge.
The tax reduces both the consumer and producer surpluses.
The triangle-shaped consumer surplus diminishes, along with the producer surplus.
The reduction in the total triangle surplus is called the "deadweight loss" or excess burden of the tax. A "dead weight" is the weight of an inert person or thing.
It also means a heavy or oppressive burden.
Taxes cause deadweight losses by reducing the gains from trade.
The deadweight loss is greater the more elastic is the demand or supply.
An inelastic demand has a small excess burden, but is it morally right, say, to tax sick people who need medicine?
There is no excess burden in taxing a totally inelastic or fixed supply.
Labor can have an elastic supply at margins such as overtime, extra household members, retirement, and self-employment, as well as the underground economy.
The deadweight loss also rises with the amount of tax more rapidly than the tax amount.
If a tax rate is too high, it can actually reduce government revenues.
This can be illustrated by the "Laffer curve."
Land is fixed in supply.
P. 169: Henry George is the most well known economist on taxing rent.
Also there is a quantum leap effect.
See Q2,4 pp. 173-4.