Question 35
Public FinanceA tax is said to be good when
- A.it yields more revenue to the state at the expense of the people's ability to pay
- B.the cost of collecting it is equal to the revenue it generates
- C.it is imposed so suddenly that no one can dodge its payment
- D.its payment causes minimum inconvenience to the tax payer
- E.it induces workers to prefer more leisure to extra work.
Show the answer and explanation
Answer: D (its payment causes minimum inconvenience to the tax payer)
Explanation
Convenience is one of Adam Smith's canons of a good tax: it should be easy and convenient to pay.