According to economic theory, consumers should support taxes on the producer, and producers should support taxes on the consumer.

Question

Quizplus · Accepted Answer

According to economic theory, both consumers and producers will try to avoid taxes. Consumers will try to minimize their tax burden by buying from producers who price their goods lower despite the taxes imposed on their output. Meanwhile, producers will try to pass on the tax burden to consumers by increasing prices. Therefore, neither group would support taxes on the other.

According to Economic Theory, Consumers Should Support Taxes on the Producer