The two main competing goals in the design of a tax system are

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Efficiency refers to the ability of the tax system to raise revenue without imposing unnecessary costs on the economy, while equity refers to the fairness of the tax system in distributing the tax burden across different income groups. These two goals are often in tension with each other, as policies that promote efficiency may not be perceived as fair, and vice versa. Therefore, achieving a balance between efficiency and equity is a key challenge in tax design.

The Two Main Competing Goals in the Design of a Tax