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1. Briefly explain why lump-sum taxes are considered to be non-distorting.
2. Why is the payroll tax not a lump-sum tax?
3. Which of these taxes generates a higher excess burden, relative to the amount of tax collected: a unit tax or an ad valorem tax? Why?
4. Demand for luxury goods like private airplanes and yachts is highly elastic, while supply of those same goods is inelastic. If an excise tax were imposed on the sale of private planes and yachts, would the tax incidence fall mainly on buyers or on sellers? Explain.
5. Give one or more reasons why our federal government relies heavily on income taxes for raising revenue, while not imposing any national sales taxes.
You are to answer each questions as 1 full page per question with references. No plagiarism. It will be scanned for plagiarism. Also you are to comment on each answer in a s
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