A ________ tax policy is one that has no impact on private decision-making,while a ________ policy is designed to encourage specific behavior.
A) flat; tax incentive
B) neutral; flat
C) neutral; tax incentive
D) none of the above

Question

Quizplus · Accepted Answer

A neutral tax policy is one that is designed to neither encourage nor discourage any specific behavior. A tax incentive policy, on the other hand, is designed to encourage certain behavior (such as charitable giving or investing in renewable energy). A flat tax policy refers to one in which everyone pays the same percentage of their income in taxes, regardless of their income level. Therefore, the best choice is C, as it includes the correct definitions for both neutral and tax incentive policies.

A ________ Tax Policy Is One That Has No Impact