microeconomics-db5

Some states exclude necessities, such as food and clothing, from their sales tax. Other states do not.

• Discuss the merits of this exclusion in terms of both efficiency and equity.
• Consider your own home state, does it exclude necessities, why or why not?
• As with all things, one decision can lead to another. Once necessities are excluded, “necessities” must be defined. Research the tax definition of “necessity” in your state (or another if your state does not exclude) and evaluate it.