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Explain what methods of taxation are non-distortionary (ie. cause no excess burden) and why we typically do not see these methods used in practice. Explain
Explain what methods of taxation are non-distortionary (ie. cause no excess burden) and why we typically do not see these methods used in practice.
Explain why conventional methods of taxation (for example, ad-valorem taxes) cause excess burden. Is it typically optimal to tax all commodities at the same rate? Why or why not?
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