Your local government needs to increase tax revenue. To increase tax revenue it can either increase the property tax on residential property or increase the property tax on all property. The government wants to impose the smallest excess burden possible. What would your recommendation be?
A. to increase the property tax on all property, because this tax would be less regressive than a tax only on residential property
B. to increase the property tax only on residential property because this tax cannot be shifted
C. to increase the property tax on all property because the demand for all property is less elastic than the demand for residential property
D. to increase the property tax only on residential property because taxpayers are allowed to deduct property taxes from their federal income tax liability, thus reducing the amount they must pay in federal taxes
Answer: C
You might also like to view...
A commodity that buyers and sellers both have will increase the efficiency of the market
Indicate whether the statement is true or false.
Fungibility is the property of an entity whose individual units:
A. are interchangeable. B. are less valuable when used together. C. are nearly impossible to identify. D. each serve a unique purpose.
A consumer spends more time searching for a good when her reservation price is:
A. reduced. B. increased. C. fixed. D. None of the statements is correct.
The demand curve will be kinked if rival oligopolists
A. Match both price increase and price reductions. B. Do not match price changes at all. C. Match price increases but not price reductions. D. Match price reductions but not price increases.