Taxes levied on sharply defined bases tend to distort choice ________ and impose ________ excess burden than taxes on more broadly defined bases.

Question

Quizplus · Accepted Answer

Taxes on sharply defined bases tend to distort choices more because they target specific activities or goods, leading to changes in behavior to avoid the tax. This results in a larger excess burden compared to taxes on broadly defined bases, which are spread out and thus have a less distorting effect on behavior.

Taxes Levied on Sharply Defined Bases Tend to Distort Choice