1. Taxes reduce economic efficiency because they eliminate some exchanges and thereby reduce the gains from...
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1. Taxes reduce economic efficiency because they eliminate some exchanges and thereby reduce the gains from these transactions. Because of (a) the deadweight losses accom- panying the elimination of exchanges and (b) the cost of collecting taxes, the costs of additional tax revenue will be greater than the revenue transferred to the government. Studies indicate that it costs between $1.20 and $1.30 for each dollar of tax revenue raised by the government. 1. Taxes reduce economic efficiency because they eliminate some exchanges and thereby reduce the gains from these transactions. Because of (a) the deadweight losses accom- panying the elimination of exchanges and (b) the cost of collecting taxes, the costs of additional tax revenue will be greater than the revenue transferred to the government. Studies indicate that it costs between $1.20 and $1.30 for each dollar of tax revenue raised by the government.
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Related Book For
Stats Data and Models
ISBN: 978-0321986498
4th edition
Authors: Richard D. De Veaux, Paul D. Velleman, David E. Bock
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