Tax smoothing is a desirable policy because it:

Question

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Tax smoothing is a policy that aims to keep taxes relatively stable over time, regardless of changes in government spending or economic conditions. This helps to reduce the distortions of incentives caused by taxes and provides greater certainty for taxpayers and investors. Tax smoothing can also help to reduce the impact of automatic stabilizers, such as changes in government revenue that occur during periods of recession or expansion. However, tax smoothing does not necessarily require a balanced budget, as long as the government is able to service its debt over time.

Tax Smoothing Is a Desirable Policy Because It