Econ 101: Taxes placed on otherwise well-functioning markets create deadweight loss. In layman terms, this means that taxes cause the size of the economic pie to shrink. How much the pie shrinks depends on how much producers and consumers respond to price changes. Well, the economic pumpkin pie in Iowa just shrunk a little:
The Iowa Department of Revenue, often accused of trying to squeeze blood out of turnips, is now searching for pennies in pumpkins.
A new department policy this year has made Halloween jack-o'-lanterns subject to the state sales tax, and many Iowa pumpkin growers are feeling tricked.
