When is one tax system less efficient than another
A)when it places a lower tax burden on lower income families than on higher income families
B)when it places a higher tax burden on lower income families than on higher income families
C)when it raises a given amount of revenue at a higher cost to taxpayers
D)when it raises a given amount of revenue at a lower cost to taxpayers

Question

Quizplus · Accepted Answer

A tax system is less efficient when it raises the same amount of revenue but at a higher cost to taxpayers. This means that the administrative costs associated with collecting taxes are high relative to the revenue raised. A more efficient tax system is one that raises the same amount of revenue but at a lower cost to taxpayers, meaning that administrative costs are minimized while revenue collection remains effective. The other choices A and B refer to the equity of the tax system, not its efficiency.

When Is One Tax System Less Efficient Than Another