Exam 2: Policy Standards for a Good Tax

Many taxpayers believe the income tax system is unfair because it is so complicated.

The theory of distributional justice is a rationale for a progressive income tax system.

Mr.and Mrs.Boln earn $63,000 annual income and pay 20% in state and federal income tax.If tax rates increase so that the couple's annual rate increases to 25%,how much additional income must they earn to maintain their after-tax standard of living?

Supply-side economic theory holds that people who benefit from a tax rate reduction will spend their tax windfall on consumption goods.

According to the classical concept of efficiency,an efficient tax should be neutral in its effect on free market allocations of economic resources.