Sample interview questions: How would you analyze the economic consequences of changing business taxation policies on large corporations?
Sample answer:
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Analyze tax incidence: Determine who ultimately bears the burden of the tax, whether it is the corporation, shareholders, consumers, or a combination thereof. This analysis involves considering factors such as the elasticity of demand for the corporation’s products or services, the ability of the corporation to pass on the tax through higher prices, and the availability of substitutes.
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Assess the impact on investment and economic growth: Evaluate how changes in taxation policies affect the corporation’s incentive to invest in new capital, hire additional workers, and expand its operations. Consider the impact on the overall level of economic activity, employment, and productivity.
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Evaluate the distributional effects: Examine how changes in taxation policies affect the distribution of income and wealth. Consider the impact on different income groups, industries, and regions. Assess whether the changes exacerbate or mitigate inequality.
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