Pollution taxes are transfer payments. This means
A) they are not a cost to the firm.
B) they are not a social cost of policy.
C) the costs associated with collection are not considered enforcement costs.
D) all of the above.

Question

Quizplus · Accepted Answer

Pollution taxes are not considered a transfer payment because they represent a cost to the firm for polluting, which is then used by the government to address or mitigate environmental damage. Thus, they are a social cost of policy, as they are intended to correct a market failure by internalizing the external costs of pollution.

Pollution Taxes Are Transfer Payments. This Means