Tuesday
September 2, 2014

Homework Help: Economics

Posted by Mary on Tuesday, November 14, 2006 at 5:05pm.

Suppose that your state raises its sales tax from 5 percent to 6 percent. The state revenue commissioner forecasts a 20 percent increase in sales tax revenue. Is this plausible? Explain.

I would think not, because wouldn't the increase in sales tax shut out some people who do not believe the price for goods is worth the cost of an additional percentage of tax applied to the price.

I agree with thinking.

In addition to people simply lowering their consumption of goods subject to sales taxes, other behavioral responses will occur. People will shift and purchase more non-taxed goods or services. (every state exempts something from their sales tax base). Further, people will cross state lines and purchase goods and services in other states. Finally, the higher the rates, the more non-compliance there likely will be.

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

12grade economics - suppose that your state raises its sales tax from 5 percent ...
Economics - Suppose that your state raises its sales tax from 5 percent to 6 ...
12th grade Economics - The chapter states that the elderly population in the U.S...
Java Programming - I'm a beginner to Java and I need to know how to do the ...
Computer Science - Design a program that will ask the user to enter the amount ...
Compter programing Design - Design a program that will ask the user to enter the...
Computer Programming Design - Design a program that will ask the user to enter ...
IFSM 300 - The sales department tells management that they can increase revenue...
Math - Pat must pay a 6 percent state sales tax and a 2 percent city sales tax ...
math - 2. The sales tax rate applied to all purchases within a state was 0.04 (...

Search
Members