Suppose a study that finds that the income elasticity of demand for a public good is greater than 1. This implies that the public good should be financed through a ________ income tax system.

Question

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People should be taxed in proportion to their willingness to pay. If the income elasticity of demand for public goods is greater than 1, then public goods should be financed through a tax system in which the proportion of income paid in taxes rises as income rises.

Suppose a Study That Finds That the Income Elasticity of Demand