According to the short NYTimes article "Fairness on Sales Taxes" there is an inequity surrounding the online collection of sales taxes, leveling the playing field among competing firms, the progressive or regressive nature of sales tax (using the average tax (total tax/total income) approach, shifting the burden of sales tax (who pays determined by changes in producer/consumer surpluses). Using the content of that article in the NY Times discuss: a.) What is meant by "fairness" with regard to taxes, anyway? Discuss tax burdens (who pays the tax) and fairness informed by elasticity of demand and elasticity of supply along with expected size of dead weight loss (DWL) under different combinations of elasticity of demand and elasticity of supply scenarios. b.) And, explain why it is important to maintain tax fairness/tax efficiency in our society between online and bricks-and-mortar retail sellers c.) Explain reason(s) sales tax is basically equitable or not equitable. Note: For part c.) please use a hypothetical example of average taxes paid by a consumer/tax payer named Jenny who lives in San Francisco, earns $30,000 income per year, pays a 10% sales tax rate on everything she purchases (rent, food, entertainment, transportation, etc.), spends all $30,000 income (not hard to do in S.F. on her income) so she effectively pays $3,000 taxes on $30,000 income. Calculate her average tax rate. Then, compare and contrast her average tax rate (equity-wise) with a consumer/tax payer named Julio who also lives in San Francisco, earns $100,000 income per year, pays a 10% sales tax rate on everything he purchases (rent, food, entertainment, transportation, etc.), and spends identically to Jenny i.e. $30,000 of his income (saves $70,000) so he effectively pay $3,000 taxes on $100,000 income. Calculate his average tax rate. d.) What makes sales tax an example of a regressive, progressive, or flat tax? What do you think of the student's suggestion? If you have ideas, what's your suggestion and the point? Give a example and explain. Student's answer: a) The NY Times article use the term "fairness" to refer and describe the lack of equity between local retailers and online retailers. This type of business limits competition (Baker 1) among them has not been equitable due to sales tax exemptions given to online retailers such as Amazon. I think that the effect of this sales tax exemption for online retailers place a heavier burden on middle and low income people because the states lose millions or billions dollars of uncollected taxes which could be used towards different assistance programs. The imposition of a sales tax causes an increase in price of a product and does automatically decrease the quantity demanded according to the elasticity of demand. (Video 1-4 on Elasticity of Demand) When a product price increase, the supply of the given product will increase causing an elastic supply. The elasticity of supply does measure the reaction of a good or product after a market price change. (Chiang, 153) Many online retailers have had an unfair advantage because consumers prefer to obtain the same product at a lower price which is only possible for those (online retailers) who do not have to pay the sale tax that others do (local retailers). b) I believe is primarily important to maintain tax fairness between online and bricks-and-mortar retail sellers in society due to few reasons. First, It is about fairness competition in business where the playing field needs to be leveled. (Baker on The Economy must share a Level Playing Field). Second, tax fairness would stimulate economic growth and therefore be beneficial for society and the entire country economy. Third, tax fairness may prevent or reduce online retailers from getting rid of employees, and causing higher levels of unemployment in society. Fourth, tax fairness might avoid more local retailers going out of business leaving many people without a job. Fifth, if tax fairness were not to be implemented, online retailers could become a monopoly in the market in certain sectors. c) An equitable tax system is one where the government imposes obligations on their taxpayers according to their income or resources. The example of Jenny and Julio is an example of an unequitable tax system where both pay the same amount of taxes ($3000) regardless of their income. Jenny average tax rate is 10% where Julio average tax rate is 3%. Jenny ends up saving nothing compare to Julio who is able to save $70,000. d) Even though tax sales may seem as an example of a flat rate, it is a clear example of a regressive tax system because the average tax rate imposed in the consumers is higher for those with lower incomes. This affects or places a burden on those with lower incomes and benefits the wealthier which pay a lower average tax rate. (Chiang 126). Just as in the example with Jenny and Julio paying the same amount of taxes but different average tax rates, leaving them in different economic situations due to their income differences