In which of the following examples is excess burden not present?
A)Harriet decides to give up her Saturday hours at her law office after income tax rates rise.
B)Rudolf still smokes three packs a day even after the excise tax on cigarettes rose 10 cents a pack.
C)Wilma reduced the automatic payroll deduction to her savings account after the tax on interest was imposed.
D)Harper decided to take a vacation in Bermuda rather than invest in stocks after the tax rate on capital gains was increased.

Question

Quizplus · Accepted Answer

In option B, excess burden is not present as Rudolf continues to smoke three packs a day even though the excise tax on cigarettes has increased. The tax has not discouraged or altered his behavior, so there is no excess burden. In the other options, individuals have changed their behavior as a result of taxes, leading to an excess burden.

In Which of the Following Examples Is Excess Burden Not