The private sector cost of tax revenues is equal to the
A) tax revenue collected by government from individuals in the economy.
B) income that could have been earned by government employees if they had worked in the private sector.
C) difference between government expenditures and tax revenues.
D) tax revenue plus the cost of tax compliance and the excess burden of taxation.

Question

Quizplus · Accepted Answer

The private sector cost of tax revenues includes not only the tax revenue collected but also the costs associated with tax compliance and the excess burden of taxation, which represents the economic inefficiency that results from the distortion of consumer and producer behavior due to taxes.

The Private Sector Cost of Tax Revenues Is Equal to the