Question

Daniel Patrick Moynihan, the late senator from New York, once introduced a bill that would levy a 10,000 percent tax on certain hollow-tipped bullets.

Do you expect that this tax would raise much revenue? Why or why not?

Even if the tax would raise no revenue, why might Senator Moynihan have proposed it?

Please explain in your own words.

Answer 1

A. Firstly, I do not think this type of tax would raise a lot of revenue. This is because when there is such a hefty tax on any comodity, the purchasing price would increase drastically, which would then result in a decrease in the demand for the comodity. Because increase in price would lead to a decrease in demand for the product.

B. Senator Moynihan would have introduced this tax precisely for this reason. To reduce the demand for these bullets, thus resulting iin the reduction in crime in that area. He probably noticed that those particular bullets were the most purchased type of bullets in that area. So it was a quick way to fix the situation.