8.1 Taxes on Buyers and Sellers
MyEconLab Concept Video
Almost every time you buy something—a late-night order of chow mein, a plane ticket, a tank of gasoline—you pay a tax. On some items, you pay a sales tax that is added to the advertised price. On other items, you pay an excise tax—often at a high rate like the tax on gasoline—that is included in the advertised price.
But do you really pay these taxes? When a tax is added to the advertised price, isn’t it obvious that you pay the tax? Isn’t the price higher than it otherwise would be by an amount equal to the tax?
What about a tax that is buried in the price, such as that on gasoline? Who pays that tax? Does the seller just pass on the full amount of the tax to you, the buyer? Or does the ...
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