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In most cases both can be true; "renter's ability to pay" is usually not the limit of what they can pay, but what they are willing to pay. If you put a tax that
by AdrianB1 7y ago
In most cases both can be true; "renter's ability to pay" is usually not the limit of what they can pay, but what they are willing to pay. If you put a tax that would increase the rent 10%, some people will pay (cut on other expenses), some will move out and someone else will move in and pay. At the end of the day, any tax is passed to the consumer, so it is never helping the consumer.
- stale2002 7y agoNo, it can't both be true. In economics, if a consumer always pays as much as they are able to, IE, it is a constant willingness to pay, then this is called perfectly elastic demand. The situation of taxes being passed in to consumers, would only happen if consumer demand is perfectly inelastic. It is literally the opposite situation. Demand can't both be perfectly elastic and also perfectly inelastic at the same time. They are opposites!