An efficient tax is one that generates minimal deadweight losses and minimal administrative burdens.

Question

Quizplus · Accepted Answer

An efficient tax should minimize the negative impact on the economy and the costs of compliance and administration. Deadweight losses refer to the economic inefficiencies caused by taxes, such as reduced output and consumption, while administrative burdens refer to the costs of enforcing and complying with tax laws.

An Efficient Tax Is One That Generates Minimal Deadweight Losses