The concept of tax sufficiency:
A) Suggests that a government should consider the income and substitution effects when changing tax rates.
B) Suggests that a government should estimate how taxpayers will respond to changes in the current tax structure.
C) Suggests the need for tax forecasting.
D) All of the choices are correct.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

Tax sufficiency suggests that a government should consider the income and substitution effects when changing tax rates, estimate how taxpayers will respond to changes in the current tax structure, and conduct tax forecasting in order to ensure that tax revenue is sufficient to fund government spending. Therefore, all of the choices are correct.

The Concept of Tax Sufficiency