In Chapter 1 you learned that taxes are a part of life in most societies. Taxes influence many of our decisions about personal finance, investment, business, and politics. Consider the following two scenarios; draft a 200-word discussion post that addresses both questions.

One common argument for imposing so-called sin taxes is the social goal of reducing demand for such products. Using cigarettes as an example, is there a segment of the population that might be sensitive to price and for whom high taxes might discourage purchases?

Kobe strongly dislikes SUVs and is appalled that so many are on the road. He proposes to eliminate the federal income tax and replace it with a $50,000 annual tax per SUV. Based on the number of SUVs currently owned in the United States, he estimates the tax will generate exactly the amount of tax revenue currently collected from the income tax. What is wrong with Kobes proposal? What type of forecasting is Kobe likely using?