Evaluate this proposal in terms of equity and efficiency

Reference no: EM131205499

Policy application. Suppose that you as an economist are asked to evaluate a proposed state tax provision to exempt the first $20,000 of retirement income for anyone over age 65 from the state income tax. The estimated revenue loss from this provision is $85 million in the first year. In the future, the revenue loss will rise only with the growth in the elderly population since the $20,000 exemption is not indexed for inflation. Evaluate this proposal in terms of equity, efficiency, and other criteria set forth in Chapters 11 and 12.

Reference no: EM131205499

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