AS economics cause of market failure

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jianwen
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#1
Report Thread starter 6 years ago
#1
why would regressive tax be a potential source of market failure?
how changes to the country's tax system could help reduce this market failure?


any help will be appreciated !!!!!
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physicsamor
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#2
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Forgive me if I am wrong, I am no teacher I am studying AS economics as well, but isn't the regressive tax an example of government failure because it was the government intervention of introducing the tax which caused the regressive effects? So the government have failed and therefore regressive tax is not a potential source of market failure (because the tax didn't cause the market to fail, the market was already performing inefficently/failing and the tax failed to correct the market failure), there has been unintended consequences as a cause of the government intervention but to correct this the government could introduce subsidies to perhaps the lower income families who have suffered the regressive effects for example. (like free school meals or something) but idk the questions confuse me XD
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