Question
Suppose there are only two people in an economy. Under the income tax system, the marginal revenue of a 1% tax increase on Harry
Suppose there are only two people in an economy. Under the income tax system, the marginal revenue of a 1% tax increase on Harry is $50, and the marginal revenue of a 1% tax increase on Sally is $30. The marginal utility of Harry is 30 utils, and the marginal utility of Sally is 20 utils. To make the income tax optimal, should be taxed more, and should be taxed less.
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Public Finance
Authors: Harvey Rosen, Ted Gayer
10th edition
9781259716874, 78021685, 1259716872, 978-0078021688
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