If a government simplified its tax system the likeliest result would be
A) a decrease in consumer surplus.
B) a decrease in producer surplus.
C) a decrease in deadweight loss.
D) a decrease in tax revenues.

Question

Quizplus · Accepted Answer

Simplifying the tax system would reduce compliance costs and increase tax compliance, leading to a decrease in deadweight loss. It is possible that tax revenues may decrease as well, but this may not necessarily be the case. However, simplifying the tax system would have no impact on consumer or producer surplus.

If a Government Simplified Its Tax System the Likeliest Result