If prices are constant economic incidence would be the more than legislative (statutory) incidence. Regarding incidence analysis, if we examine distributional changes which result if one tax is substituted for another while holding total expenditure and tax revenue as constant, then we use budget incidence. If the individual works more after the tax on labour, that means substitution effect outweighs the income effect. Supply side economists are for increasing the tax rates. As a result of increase in the tax rate, both excess burden and taxrevenue increase. 4 A progressive tax system encourages individuals to work harder. The more elastic is demand is relative to supply, the greater the portion of burden is borne by consumers.
Please write down whether the following statements are true or false, and explain your answer very briefly.
If
Regarding incidence analysis, if we examine distributional changes which result if one tax is substituted for another while holding total expenditure and tax revenue as constant, then we use budget incidence.
If the individual works more after the tax on labour, that means substitution effect outweighs the income effect.
Supply side economists are for increasing the tax rates.
As a result of increase in the tax rate, both excess burden and taxrevenue increase. 4
A progressive tax system encourages individuals to work harder.
The more
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