What does an efficient tax system do
A)It imposes small deadweight losses and administrative burdens.
B)It imposes small marginal rates and deadweight losses.
C)It imposes small administrative burdens and transfers of money.
D)It imposes small marginal rates and transfers of money.

Question

Quizplus · Accepted Answer

An efficient tax system imposes small deadweight losses (reduced economic activity due to taxes) and administrative burdens (costs of collecting taxes) as it helps in maximizing economic efficiency. This means that the tax revenue generated by the tax is relatively high compared to the economic cost imposed by the tax. Therefore, option A is the correct choice.

What Does an Efficient Tax System Do