Tax policy is one of the areas of greatest political tension. One variable affecting policy makers' decisions about tax policy includes ______, which is mainly an equity criterion.

Question

Quizplus · Accepted Answer

Distributive effects refer to the way in which taxes affect the distribution of income among different groups in society. It is an equity criterion because it is concerned with whether the tax burden is being fairly distributed among different segments of the population. Diagonal equity refers to the idea that people with similar abilities to pay taxes should pay similar amounts, regardless of their income sources. Collectability and expenditure effects are both factors that affect the practicality and efficiency of tax policies, but they are not equity criteria.

Tax Policy Is One of the Areas of Greatest Political