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A Tax That Raises No Revenue For The Government Cannot Have Any Deadweight Loss.

has no deadweight loss cannot raise any revenue for the government. A tax that raises no revenue for the government cannot have any deadweight loss.
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False False Explanation: The statement A tax that has no deadweight loss cannot raise any revenue for the government is incorrect. An example is the case of a tax when either supply or demand is perfectly inelastic. The tax has no effect on quantity or on deadweight loss, but it does raise revenue. The statement A tax that raises no revenue for the government cannot have any deadweight loss is also incorrect. An example is the case of a 100% tax imposed on sellers. With a 100% tax on their sales of the good, sellers will not supply any of the good, so the tax will raise no revenue. Yet the tax has a large deadweight loss because it reduces the quantity sold to zero. See Section: Deadweight Losses and the Gains from Trade.
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