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Question: Notes: 1. Any submitted documents that cannot be opened will not be graded and receive a zero.
2. Do your own work. You may work together, but you answers should not be the same. Answers considered to be the same will be graded as a zero.
3. Start each new question on a separate page.
1. Suppose that a state government levies an ad valorem sales tax on the purchase of all goods at retail but not on the purchases of services. The tax is levied only on final sales of goods and not on sales of intermediate goods. The state has a companion use tax, but makes little effort to collect that tax for consumer purchases except for automobiles. Discuss the various ways (there are at least four) an individual consumer could change behavior to avoid or reduce liability for the state sales tax. What economic costs could arise from each type of action?
2. "Sales taxes are fairer than income taxes because sales taxes cannot be avoided by the rich." Evaluate this idea. Describe the evidence about the distribution of sales tax burdens among different income taxpayers. Would it be possible to design a sales tax that is more progressive than an income tax?
For this assignment you will either be creating a technical description or an extended technical definition. Officially, an extended technical definition is a microgenre of a technical description.
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Naturalistic Observations and Evaluation
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