In 2006, several members of Congress argued for eliminating most of the tax reductions that had been enacted during the previous five years. However, virtually no one was in favor of eliminating the “child tax credit,” which cut the taxes of most families by $ 1,000 per child. One economist argued that keeping the child tax credit “might be good for social purposes, but there’s no economic case for it” [Ip, 2006]. Explain what this economist meant using the concept of excess burden.
Answer to relevant QuestionsFormer Secretary of Labor Robert Reich has advocated for a cap- and- trade program for greenhouse gases. Under Reich’s proposal, the government would auction off the permits and distribute the revenues in a lump sum ...In an effort to reduce alcohol consumption, the government is considering a $ 1 tax on each gallon of liquor sold (the tax is levied on producers). Suppose that the supply curve for liquor is upward sloping and its equation ...The government provides patents to pharmaceutical companies that allow them to charge high prices for the drugs they develop for some years. If a company succeeds in developing an effective drug, the patent protection can ...Athletes who win Olympic gold medals also receive a cash award of $ 25,000. In 2012, President Obama supported legislation proposed by Senator Marco Rubio to exempt these winnings from federal taxation [Parnes, 2012]. Is ...According to Feldstein [2008b], “only about 10% to 20%” of a one-time tax rebate provided to taxpayers in 2008 was spent immediately. Using the life cycle model of Figure 18.7, explain why this result could have been ...
Post your question