Answered: How can tax incidences have a positive…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

How can tax incidences have a positive and negative impact on the economy?

Expert Solution

Step 1

Tax incidence refers to the burden of a particular tax that is imposed by the government.

Step 2

Tax incidence can have both positive and negative impact on the economy as the imposer is always the government and the burden is always on the citizens, differing sometimes between buyers and sellers.

Step 3

Positive effects

-Taxes are largely compulsory payments
-It helps in fostering economic growth
-This is used to making the economy better socially and economically, which increases employment

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