Asked by Krystal Bandith on Jun 13, 2024
Verified
A nonneutral tax cannot be used to reduce distortions created by another nonneutral tax.
Nonneutral Tax
A tax that impacts differently on different types of economic activities, influencing the allocation of resources.
- Gain insight into the notions of neutral and non-neutral taxes and their impact on decisions made in the economic realm.
- Explore the linkage between taxation, externalities, and taxes that distort market behavior.
Verified Answer
DR
D'Ondre RobinsonJun 19, 2024
Final Answer :
False
Explanation :
A nonneutral tax can be used to counteract or reduce distortions created by another nonneutral tax, often through corrective measures or targeted incentives that align with economic efficiency goals.
Learning Objectives
- Gain insight into the notions of neutral and non-neutral taxes and their impact on decisions made in the economic realm.
- Explore the linkage between taxation, externalities, and taxes that distort market behavior.
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