In designing a tax system,what two objectives do policymakers have
A)maximum revenue and the smallest cost to taxpayers
B)efficiency and the smallest cost to taxpayers
C)efficiency and equity
D)maximum revenue and debt reduction

Question

Quizplus · Accepted Answer

Policymakers have two objectives in designing a tax system: efficiency and equity. Efficiency means that the tax system should create the least amount of distortion possible in the economy. An efficient tax system minimizes the cost of collecting taxes and compliance costs, and does not discourage work, saving, investment, or entrepreneurship. Equity means that the tax system should distribute the burden of taxation in a fair and just way, based on the ability to pay principle. An equitable tax system ensures that those who have more income or wealth pay a greater share of the taxes, while those who have less income or wealth pay a lesser share.

In Designing a Tax System,what Two Objectives Do Policymakers Have