Asked by court Adams on Jun 06, 2024
Verified
Briefly evaluate the advantages and disadvantages of a lump-sum tax.
Lump-Sum Tax
A tax that is a fixed amount, not dependent on the taxpayer's income or activity level.
Advantages
Benefits or strengths that give an entity a favorable or superior position relative to competitors or alternatives.
Disadvantages
The negative aspects or conditions that can lead to unfavorable outcomes or reduce effectiveness in a given context.
- Evaluate the advantages and disadvantages of different tax systems including lump-sum tax.
Verified Answer
AA
Alexzandra Azi JavierJun 09, 2024
Final Answer :
A lump-sum tax is the most efficient tax because the tax does not distort incentives; thus, a lump-sum tax does not create a deadweight loss. But because a lump-sum tax places the same tax burden on poor people as rich people, most would view it as unfair.
Learning Objectives
- Evaluate the advantages and disadvantages of different tax systems including lump-sum tax.