When Different Consumers Pay Different Amounts of Taxes, Ricardian Equivalence

question 21

Multiple Choice

When different consumers pay different amounts of taxes, Ricardian equivalence may fail because

• A) alternative ways of collecting the same tax revenue can have different welfare effects.
• B) consumers can become jealous of one another.
• C) such differences in taxes create credit market imperfections.
• D) higher taxes on more talented people may be politically popular.
• E) such differences in taxes create welfare losses to the business community.

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