Question

If the government wants to minimize the deadweight loss of taxation, which of the following items are good candidates for an excise tax (select all that apply)? 1. emergency plumber services 2. Coca-Cola 3.insulin 4. food at restaurants

Answer 1

Emergency plumber services, Coca-Cola, and insulin are good candidates for an excise tax to minimize deadweight loss of taxation.

Step-by-step explanation:

An excise tax is a type of indirect tax imposed on specific goods, services, or activities, rather than on income or property. Governments use excise taxes to regulate behavior, discourage consumption of certain items, and generate revenue. Examples include taxes on tobacco, alcohol, gasoline, and luxury goods.

Excise taxes are typically included in the price of the product, and manufacturers or sellers are responsible for remitting the tax to the government. For the government to minimize deadweight loss of taxation, goods that are inelastic and necessary for daily life are good candidates for an excise tax. These goods include emergency plumber services, Coca-Cola, and insulin.

Answer 2

Excise tax is applicable on items that the government don't want you to buy which includes luxurius and health injurious items. Excise taxes don't apply on food items and medicines because its unethical act by the government to increase the cost of medicines by enforcing taxes. The available options are Coca cola (harmful drink) and Emergency plumber services.

The remaining two items are not good candidate for excise tax because its use is the basic rights of people of America.