Sample Research Paper

Words 1,500

1. An ad valorem tax (a VAT or TVA) is a tax based on the assessed value of an item or a tax levied on the cost of production of an item. This tax has the disadvantage of being regressive and the advantage of not punishing more cheaply made versions of an item. A specific tax is levied on a set amount of money per unit (e.g. $1 per pound). This tax is simpler to assess but punishes the makers and buyers of lower-quality goods. A compound tax combines the simple tariff and the ad valorem tax. It avoids penalizing lower quality goods as does the simple tariff but can be complicated and onerous to apply.

2. The nominal rate of protection is the percentage tariff that is levied against a product when it enters a country. The nominal tariff tends to overstate the effective protection when there are subsidies on one or more of the base products or finished product. It tends to understate the effective protection when exporting countries “dump” goods.

3. It is almost always worse to be poor – and this is as true in the field of tariffs and international trade as in other areas for the tariff structures of developed countries often keep less developed countries from industrializing – thus keeping them undeveloped. This dynamic is explored in the following citation:

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