Which of the following statements about a land tax is correct?
A) A tax on raw land causes a small but positive deadweight loss.
B) Landowners and renters share the burden of a tax on raw land.
C) The government's tax revenue exactly equals the loss of the landowners.
D) The supply of improvements to land such as sewers and roads is perfectly inelastic.

Question

Quizplus · Accepted Answer

A land tax is considered efficient because it does not distort economic decisions; the supply of land is perfectly inelastic, so the tax burden falls entirely on landowners, and the government's tax revenue equals the loss to landowners.

Which of the Following Statements About a Land Tax Is