In 2002, the US federal government levied a tax of 3 percent on that part of a

Question:

In 2002, the US federal government levied a tax of 3 percent on that part of a car's price exceeding $\$ 40,000$. (For example, the tax liability on a $\$ 50,000$ car would be $0.03 \times(\$ 50,000-$ $\$ 40,000$ ), or $\$ 300$.) Discuss the efficiency, equity, and administrability of this "luxury car tax."

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