Commodity Wages Form

Instructions and help about Commodity Wages

♪ [music] ♪ - [Tyler] Today we begin the first of several talks on taxes and subsidies. We're not going to be talking about income taxes and income subsidies. Those are typically topics for macroeconomics. Instead, we'll be talking about taxes and subsidies on goods, like a sales tax or a subsidy for wheat. These are also called commodity taxes and subsidies. So let's get going. We're going to be emphasizing three important ideas about commodity taxation. First, who pays the tax does not depend on who writes the check to the government. For example, suppose the government is taxing apples. The government could make the buyer of apples pay for each apple that they buy. Or they could require the sellers of the apples pay for each apple that they sell. What we're going to show is that, from the point of view of the buyers or sellers, it actually doesn't matter how the tax is placed. The actual outcomes are going to be identical. Another way of putting this is that the economic inciden