Suppose that the tax system had the following features. Explain how individuals behaviour is affected. a. Contributions

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Suppose that the tax system had the following features.

Explain how individuals’ behaviour is affected.

a. Contributions to charity are tax-deductible.

b. Sales of beer are taxed.

c. Realized capital gains are taxed, but accrued gains are not. (When someone owns a share of stock that rises in value, she has an ‘accrued’ capital gain. If she sells the share, she has a ‘realized’ gain.)

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Economics

ISBN: 124344

2nd Edition

Authors: N. Gregory Mankiw

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