How do policymakers consider goals of efficiency and equity in tax policy
A)complementary in most countries
B)necessary for application of the ability-to-pay principle
C)often in conflict with each other
D)more easily sustained when tax laws are complex

Question

Quizplus · Accepted Answer

Goals of efficiency and equity in tax policy are often in conflict with each other. For example, a tax that is highly efficient in collecting revenue may not be equitable because it may disproportionately burden certain groups. Conversely, a tax that is highly equitable may not be efficient because it may be more difficult to administer or may not generate sufficient revenue. Policymakers must balance these competing goals to design a tax system that is both effective and fair.

How Do Policymakers Consider Goals of Efficiency and Equity in Tax