If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government, the tax does not have a deadweight loss.

Question

Quizplus · Accepted Answer

If the reduction in surplus is exactly offset by the tax revenue, then the tax does not have a deadweight loss because the government is able to use the tax revenue to provide public goods and services that benefit society.

If a Tax Generates a Reduction in Surplus That Is