Which of the following taxes is the most efficient tax?

Question

Quizplus · Accepted Answer

A lump-sum tax charges a fixed amount to all taxpayers regardless of their income or consumption. This tax is the most efficient because it does not create any distortions in consumer behavior or disincentivize working more (as would progressive income taxes or proportional income taxes) - it is simply a fixed cost of living in a particular country. Additionally, because it does not vary with income, it does not lead to any negative economic impacts associated with income redistribution.

Which of the Following Taxes Is the Most Efficient Tax