Why most peoples marginal tax rate is higher
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What does this imply about the trade-off between current and future taxes? How might this trade-off change if the overall size of the economy grows over time?
Explain why most people's marginal tax rate is higher than their average tax rate. Is a system in which average tax rates are higher than marginal tax rates?
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Drawing on the idea of economic incidence and administrative cost, explain why this tax may not benefit consumers after all.
Now, suppose that food and children's clothing are exempted from the sales tax. Is this likely to make the tax more or less regressive?
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