Neas-Seminars

Unrealistic Taxes


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By samuel - 2/3/2009 8:41:14 PM

In real life, sales and excise taxes are almost always collected as a percentage of the purchase price, not as an absolute quantity. And although the supply and demand curves are simplified, would it not be more instructive to model taxes in this way?

[NEAS: Yes, and eonomists always model taxes as they actually occur. The Landsburg text uses additive amounts to simplify the mathematics.]