On What Basis Is a Tax on Expensive Speed Boats

question 4

Multiple Choice

On what basis is a tax on expensive speed boats that are purchased only by the wealthy NOT likely to satisfy the condition of vertical equity

• A)Wealthy buyers are most likely to be subject to the implications of the flypaper theory of tax incidence.
• B)Horizontal equity is most associated with a tax on luxury items.
• C)Buyers can easily substitute other luxuries for expensive speedboats.
• D)It is very unlikely that the burden of the tax will fall on workers who make the expensive speed boats.

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