In Adam Smith’s The Wealth of Nations, he describes a “window tax” that was imposed on dwellings in England. The tax per window increased with the number of windows.
a. Evaluate this tax in terms of the likely cost of administering it.
b. Evaluate it in terms of vertical equity.
c. Describe a simple way by which people with already existing dwellings could avoid tax.
d. Relate such avoidance behaviour to the concept of excess burden.