Macroeconomics: Principles, Problems, & Policies
20th Edition
ISBN: 9780077660772
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 5, Problem 2DQ
To determine
The special interest and the collective-action problem.
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What kinds of markets should a government tax according to the Ramsey taxation result? What is the economic intuition for why it’s efficient to tax these markets?
What are progressive and proportional forms of taxation? What are the Governments goals when it comes to using these types of taxation?
Why is taxation considered as the strongest among the three inherent powers of the State?
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Macroeconomics: Principles, Problems, & Policies
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- Suppose that the government wants to tax wealthy people. They notice that only wealthypeople buy yachts. So the government decides to tax yachts. Is this an effective way to tax thewealthy? Explain your answerarrow_forwardSome economists have argued that taxation is one of the causes of economic inefficiency. They claim that taxation creates serious adverse effects on the economy through market distortions and heavy burdens on businesses and consumers. Others argue that taxation is not only a reliable source of revenues to implement government programs and projects (building schools, roads, highways, financing research & development), but also the net loss of efficiency due to taxation is not too large as claimed. The negative effects of taxation can be eliminate by implementing an optimal tax code. Provide your arguments on how we should reform the tax code in order to allow the governments to collect tax revenues without putting unnecessary burdens to businesses and consumers. Or should the government eliminate taxation?arrow_forwardWhat are some of the problems associated with working out whether a tax system is equitable?arrow_forward
- Explain in no less than 4 sentences why Taxation is called the Lifeblood if the Government/State.arrow_forwardAccording to the Ramsey taxation result, which of the following markets would be the most efficient to tax? Pizza Caviar Ice cream Ricearrow_forwardGive a brief example of proportional tax systemarrow_forward
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