The concept of tax sufficiency:
A) Suggests the need for tax forecasting
B) Suggests that a government should estimate how taxpayers will respond to changes in the current tax structure
C) Suggests that a government should consider the income and substitution effects when changing tax rates
D) All of these
E) None of these

Question

Quizplus · Accepted Answer

The concept of tax sufficiency involves all of the options listed. Tax forecasting is important to ensure that the government is able to collect enough revenue to meet its expenses. Estimating how taxpayers will respond to changes in the current tax structure is important to ensure that tax policies achieve their intended goals. Considering the income and substitution effects is necessary to predict how changes to tax rates will affect behavior and revenue.

The Concept of Tax Sufficiency