An economy with nominal tax rates significantly higher than effective tax rates has

Question

Quizplus · Accepted Answer

If nominal tax rates are significantly higher than effective tax rates, it suggests that there are loopholes in the tax code that allow taxpayers to avoid paying the full tax rate. This could be due to deductions, credits, exemptions, or other tax breaks that reduce the amount of taxable income. As a result, the effective tax rate that taxpayers actually pay is lower than the nominal rate. This indicates that the tax system may be inefficient and in need of reform.

An Economy with Nominal Tax Rates Significantly Higher Than Effective