Given that the government wishes to raise a certain amount of tax revenue, individuals prefer:
A)a 100% lump sum tax.
B)a combination of a 70% excise tax and a 30% lump sum tax.
C)a combination of a 30% excise tax and a 70% lump sum tax.
D)a 100% excise tax.

Question

Quizplus · Accepted Answer

A lump sum tax is a fixed amount of tax that is paid regardless of income or consumption. An excise tax is a tax on a specific good or service. Individuals prefer a lump sum tax because it is more certain and predictable than an excise tax.

Given That the Government Wishes to Raise a Certain Amount