Suppose rebecca needs a dog sitter so that she can travel to her sister's wedding. rebecca values dog sitting for the weekend at $200. susan is willing to dog sit for rebecca so long as she receives at least $150. rebecca and susan agree on a price of $175. suppose the government imposes a tax of $10 on dog sitting. the tax has made rebecca and susan worse off by a total of

The tax has only made Susan worse off by $10 or 5.7% because Rebecca is the one who is going to pay for the dog sitting and not Susan (who is going to have an income of $165 after-tax).

Further Explanation:

Income Tax: It is the additional payment that an individual needs to pay on the amount of income he/she generates. Here $10 is the tax on the income which Susan is going to generate by dog sitting the dog of Rebecca.

Here, it can be seen that Susan is the one who is earning from the transaction and not Rebecca. So, Rebecca is should not bear any tax payable to the government since both of them agree to a price of $175 so that is the only amount which Rebecca is going to pay for dog sitting. Also, if Susan herself pays the whole amount of tax, it still would not bother her because her expectation from dog sitting was $150 which is still lesser than what she expected in the first place.

Learn more:

1.Learn more about the tax on the profit from selling the fixed assets

2.Learn more about the personal tax

3.Learn more about the role of money

Answer details:

Grade: Senior School

Subject: Taxation

Chapter: Tax imposed on various services.

Keywords: Income tax, payment of tax, dog sitting during the wedding, dog sitter, worse off condition of Rebecca and Susan.

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step-by-step explanation:

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step-by-step explanation: