Many environmentalists have advocated a substantial increase in the gasoline tax to cut down the federal deficit and to reduce pollution due to auto emissions.Such a tax increase would be devastating to people who commute significant distances to work.In fact, it would provide an incentive to relocate closer to work or change jobs.Economists refer to such effects of taxes as the
A)burden of a tax.
B)regressive incidence of a tax.
C)incidence of a tax.
D)excess burden of a tax.

Question

Quizplus · Accepted Answer

The effects described in the passage are known as the excess burden of a tax, which refers to the amount of economic activity that is lost due to the tax. In this case, the tax would discourage people from commuting long distances and could lead to inefficiencies in the labor market.

Many Environmentalists Have Advocated a Substantial Increase in the Gasoline