Consider two consumption tax systems: (a) one in which all goods are taxed at the same rate and (b) another in which the “necessities” are not taxed and “luxuries” ar taxed at a higher rate. Compare the equity and efficiency of these two systems.
Answer to relevant QuestionsConsider the four basic questions of public finance listed in the chapter. Which of these questions are positive—questions that can be proved or disproved—and which are normative—questions of opinion? Explain your ...Many states have constitutional requirements that their budgets be in balance (or in surplus) in any given year, but this is not true for the U.S. federal government. Why might it make sense to allow for deficits in some ...Since the free market (competitive) equilibrium maximizes social efficiency, why would the government ever intervene in an economy? Researchers often use panel data (multiple observations over time of the same people)to conduct regression analysis. With these data, researchers are able to compare the same person over time in order to assess the impacts ...When traveling on vacation recently in a country with a large consumption tax, I was presented with a deal: pay cash and get a 10% discount. Given that credit card transactions cost the merchant less than 2%, why did the ...
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