The most efficient tax possible is a
A)marginal income tax.
B)lump-sum tax.
C)consumption tax.
D)corporate profit tax.

Question

Quizplus · Accepted Answer

A lump-sum tax is a fixed amount that must be paid regardless of income or consumption levels, and does not distort incentives or behavior. This makes it the most efficient tax possible. Marginal income taxes create disincentives to work or earn more money, while consumption taxes may disproportionately burden lower-income individuals. Corporate profit taxes also have potential negative impacts on investment and economic growth.

The Most Efficient Tax Possible Is a