Suppose that,in place of the progressive income tax,a nation is considering adopting a national sales tax of 25% on all goods.
(a)If the politicians want to use a sales tax but also want the tax to be progressive,what could they do? Evaluate this option in terms of what you know about optimal commodity taxation.
(b)Would all groups be affected by the transition to a consumption tax in the same way? Explain.

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The Answer of Suppose that,in place of the progressive income tax,a nation is considering adopting a national sales tax of 25% on all goods.
(a)If the politicians want to use a sales tax but also want the tax to be progressive,what could they do? Evaluate this option in terms of what you know about optimal commodity taxation.
(b)Would all groups be affected by the transition to a consumption tax in the same way? Explain.

Suppose That,in Place of the Progressive Income Tax,a Nation Is