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FS08EC2106_L12 - CHAPTER 12 The Design of the Tax System...

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C H A P T E R The Design of the Tax System ECON 2106-C Prof. B-C Kim 12
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In this chapter, look for the answers to these questions: What are the largest sources of tax revenue in the U.S.? What are the efficiency costs of taxes? How can we evaluate the equity of a tax system? 1
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THE DESIGN OF THE TAX SYSTEM 2 Introduction Lessons about taxes from earlier chapters: A tax on a good reduces the market quantity of that good. The burden of a tax is shared between buyers and sellers depending on the price elasticities of demand and supply. A tax causes a deadweight loss.
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