Taxes are transfer payments - payments made by the polluters to the public sector and eventually to those in society who are benefited by the resulting public expenditures - and are therefore not a social cost of the policy.

Question

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Taxes are not considered a social cost of a policy because they are a transfer of payments from the polluters to the public sector and eventually to those who benefit from public expenditures. They do not represent an actual cost to society, but rather a redistribution of resources.

Taxes Are Transfer Payments - Payments Made by the Polluters