Tax policy is one of the areas of greatest political tension. One variable affecting policy makers' decisions about tax policy includes ______, which refer(s) to the equity issue of which subgroups of citizens are most impacted by the tax.

Question

Quizplus · Accepted Answer

Distributive effects refer to how tax policies impact different subgroups of citizens. This is an important consideration for policy makers when deciding on tax policy as they must weigh the potential equity implications for different demographics. Diagonal equity refers to the idea that taxpayers in similar positions should have similar tax liabilities, collectability refers to how feasible it is to collect the tax, and expenditure effects refer to how tax policy affects government spending. While these are all important variables to consider, they do not specifically relate to the equity implications of tax policy for different subgroups.

Tax Policy Is One of the Areas of Greatest Political