Attempt the following economic questions. Provide brief but clear explanations (30MARKS).

1. The economic theory of property taxation states that when a new (and permanent) property tax is imposed, only future owners of the property bear the burden of the tax

2. In evaluating the economic e?ciency of various commodity taxes, it is not safe to assume that the excess burden of a tax is measured well by the total amount of tax revenue raised by that tax.

3. Recently, some tax analysts have proposed a tax break that would allow people to save unlimited amounts of money in retirement saving plans where interest income is allowed to accumulate tax free. The e?ect of such a plan would be to raise the saving rate.

4. Because monopoly profits are simply an income distribution issue, the conditions for the Fundamental Theorem of Welfare Economics are satisfied in an economy with some odds provided by monopolies.

5. The theory of welfare economics suggests that the government should pay for development costs for new drugs.