U.S.taxpayers spend many hours during the year maintaining records for tax purposes and preparing their income tax returns.This administrative cost
A)is part of the deadweight loss of taxation.
B)is equal to the value of consumer surplus associated with the income tax system.
C)can be claimed as a deduction on income tax returns.
D)is larger for individuals in the lowest income quintile than for individuals in the highest income quintile.

Question

Quizplus · Accepted Answer

The administrative cost of maintaining records for tax purposes and preparing income tax returns is considered part of the deadweight loss of taxation, which is the cost to society in terms of efficiency and economic well-being that results from taxes. This cost is higher for individuals with lower incomes, as they often have more complex tax situations and fewer resources to devote to tax preparation. The cost cannot be claimed as a deduction on income tax returns. The value of consumer surplus associated with the income tax system is not related to administrative costs.

UStaxpayers Spend Many Hours During the Year Maintaining Records for Tax