If the government imposed a €1,000 tax on every individual,

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Quizplus · Accepted Answer

This would be an efficient tax because it does not create any distortions in the market or discourage any particular behavior. However, it may not be considered equitable as everyone is taxed the same amount regardless of their income or ability to pay. It is not an income tax as it is a fixed amount rather than a percentage of income. Allocative efficiency would not necessarily have to be sacrificed with this tax as it does not impact the allocation of resources in the market.

If the Government Imposed a €1,000 Tax on Every Individual