A lump-sum tax is also called a head tax and charges the same amount to each taxpayer. This type of tax is considered the most efficient form of taxation because it has no deadweight loss or distortionary effects on behavior. Therefore, all the statements presented in the options are true.

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A Lump-Sum Tax Is

Question 38

Multiple Choice

A lump-sum tax is:

A) also called a head tax.
B) the most efficient form of taxation.
C) a tax that charges the same amount to each taxpayer.
D) All of these statements are true.

Correct Answer: