Edgar Browning and William Johnson, in a paper published in the Journal of Political Economy (1984), presented evidence that a one-dollar transfer to the bottom 40 percent of income distribution costs the top 60 percent nine dollars.If correct, this finding proves
A)the tax system is generating significant excess burdens.
B)these transfers are not worth the cost.
C)loopholes have to be closed.
D)the burden of the tax system is too great.

Question

Quizplus · Accepted Answer

The finding suggests that the tax system is generating significant excess burdens, as the cost of transferring one dollar to the bottom 40 percent of income distribution results in a nine-dollar cost to the top 60 percent. This suggests that the tax system is inefficient and resulting in a net loss to society.

Edgar Browning and William Johnson, in a Paper Published in the Journal