Tax policy is partly based on the notion that
A) high taxes are preferable to low taxes.
B) governments must always run a budget surplus.
C) markets never work efficiently.
D) people respond to financial incentives.

Question

Quizplus · Accepted Answer

Tax policy often includes financial incentives such as tax credits or deductions to encourage certain behaviors or discourage others. This is based on the idea that people respond to these incentives, and will adjust their behavior accordingly.

Tax Policy Is Partly Based on the Notion That