How Much Does It Cost to Tax a Dollar of Revenue

question 418

Multiple Choice

How much does it cost to tax a dollar of revenue away from the private sector and transfer it to the government to finance a government program?

• A) one dollar
• B) less than one dollar because the administration of and compliance with the tax laws creates jobs for people
• C) more than a dollar because collection of the taxes requires resources that would otherwise be available for private sector production
• D) more than a dollar because of the excess burden resulting from the elimination of productive exchanges by the taxes
• E) Both c and d are correct.

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