Taking the Bull by the Horns Can Cost States Plenty

1. Think of the types of taxes charged at each level of government. How does the elasticity of the tax base affect the decision of which tax to assess at each level of government to provide these goods?

The greater the elasticity of the tax base (the more mobile the tax base), the higher the level of government that will tax it.

2. Does the article suggest that, all else constant, the US government should not have walked away from the Kyoto Protocol, an international agreement to combat global warming? Why or why not?

All else constant, yes. If the US government tried to implement its own policies, it would be bearing all of the costs, and receiving a fraction of the benefits. Teaming up with other governments would help share the costs..

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