Committee on reforming taxes o telecommunication services

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You are an assistant to a senator who chairs an ad hoe committee on reforming taxes o telecommunication services. Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs, Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of a consumer’s phone bill. These high tax rates on telecom services have become quite controversial, due to the fact that the regulation of the telecom industry has led to a highly competitive market. Your best estimates indicate that based on current tax rates, the monthly market demand for telecommunication services is given by Qd=250 -5P and the market supplying (including taxes) is Qs=4P-110(both in millions) where P is the monthly price of telecommunication services. The senator is considering tax reform that would dramatically cut tax rates, leading to a supply function reform that would dramatically cut tax rates, leading, to a supply function under the new tax policy of Q^s= 4.171P -110. How much money would a typical consumer save each month as a result of the proposed legislation?

Reference no: EM131166614

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