The excess burden of a tax on interest income is $5 billion per year.Total interest income per year is $50 billion.The tax currently collects $15 billion in revenue per year.The efficiency-loss ratio of the tax is therefore 0.33.

Question

Quizplus · Accepted Answer

Efficiency-loss ratio = Excess burden of tax / Tax revenue = $5 billion / $15 billion = 0.33. Therefore, the statement is true.

The Excess Burden of a Tax on Interest Income Is