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Unformatted text preview: than income? Some economist advocate taxing consumption rather than income because taxing income discourages saving. A consumption tax would not distort people's saving decisions. A good example of this tax would be a worker's 401K or for the military the Thrift Savings Plan. This allows the worker to save money and only be taxed when the money is withdrawn or spent. Deadweight Loss Question on #6 6). What is the marginal tax rate on a lump-sum tax? How is this related to the efficiency of the tax? The marginal tax rate on a lump-sum tax would be zero due to the fact that no tax is owed on an additional dollar of income. Meaning regardless the amount earned the tax would be the same for everyone. Macroeconomics II Unit 3 This is related to the efficiency of the tax because it is easy for taxpayers to calculate what they owe and there is minimal administrative burden....
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This note was uploaded on 04/10/2011 for the course ECO 202 taught by Professor Rondeau during the Spring '11 term at Post.
- Spring '11