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Econ 101: Principles of Microeconomics

econ 101 : Principles of MicroeconomicsChapter 7: TaxesFall 2010 Herriges (ISU)Ch. 7: TaxesFall 20101 / 25 Outline1 The Excise Tax2 The Benefits and Costs of Taxation3 Tax Fairness versus Tax Efficiency4 the tax SystemHerriges (ISU)Ch. 7: TaxesFall 20102 / 25 TaxesIn chapter 5, we looked at ways that the government intervenes in themarketplace using- Price ceilings- Price floors and/or price supports- QuotasHowever, we are used to a much more frequent form of governmentintervention:Taxes .. in this world nothing can be said to be certain, except death andtaxes. Benjamin Franklin (13 November 1789)Taxes are essential for government to , as we shall see, taxes also distort the incentives of themarketplace, creating losses in must trade-off the gains from government programsagainst the inefficiencies created in the process of raising the fundsnecessary for i

bear the burden of the tax that pays for that spending. -The federal gasoline tax is an example in that it is used for the maintenance and improvement of federal roads.

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  Principles, Burden, Microeconomics, Cone, Econ 101, Principles of microeconomics, The tax

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