Economic Paper

Consequences of Taxes: The Whiskey Rebellion

1. From the historic information presented in the video, discuss whether you believe that the excise tax placed on whiskey to pay for the national debt incurred during the U.S. Revolutionary War can be justified by the benefits principle or if some other explanation seems more appropriate. In addressing this question, be sure to define what is meant by the benefits principle.

2. Based on the economics of tax incidence, discuss how the intensity of protest over imposition of the excise tax on whiskey to pay for the national debt incurred during the U.S. Revolutionary War may be related to the supply and demand elasticities of whiskey during the late 1700’s. Assume that the demand for whiskey was elastic during the late 1700’s and that the supply of whiskey produced in the frontier regions of the country was inelastic during this time period.

Grading Rubric Your essay will be assessed as either ‘Meets expectations’ or ‘Needs improvement’ on each of the criteria in the table below.

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Criteria Meets Expectations Needs Improvement Writing Ideas are well-organized. The writing is difficult to follow

and/ or poorly organized. Transition sentences effectively connect one idea to the next.

Transition sentences are absent or ineffective.

The essay is free of typos and gram- matical errors.

Typos and/ or grammatical errors distract the reader.

Sources are properly cited and ref- erenced.

Source material cita- tions/references needed, or are missing/ incorrect.

Economic analysis

Explanation of the benefit princi- ple is correct and discussion of how it applies to the historic facts is cor- rect. A reasonable alternative ex- planation for the tax is presented.

Explanation of the benefit princi- ple is incorrect or interpreted incor- rectly as it applies to the historic facts. Lack of a reasonable alter- native explanation for the tax.

Explanation of how demand elas- ticity and supply elasticity are re- lated to excise tax incidence and how this affects who actually paid the tax is clearly explained and in- terpreted.

Explanation of how demand elas- ticity and supply elasticity are re- lated to excise tax incidence and how this affects who actually paid the tax is insufficiently explained or unclear.

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