Suppose the government wants to finance housing for low-income families by placing a tax on the purchase of luxury homes.Assume the government defines a luxury home as a home that is purchased for at least $1 million.This tax is consistent with the

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The ability-to-pay principle suggests that taxes should be levied according to an individual's capacity to bear the tax burden. Taxing luxury homes aligns with this principle, as it targets those who can afford to pay more.

Suppose the Government Wants to Finance Housing for Low-Income Families