Why Is It Not Appropriate to Compare the Cost of Administering

question 6

Multiple Choice

Why is it not appropriate to compare the cost of administering a local real property tax with the cost of administering the federal individual income tax?

• A) Federal employees are better paid than are local employees.
• B) Local employees are often supported by federal grant funds raised by the income tax.
• C) Federal income tax revenue is larger than local real property tax revenue.
• D) The costs of collecting the individual income tax must include compliance cost as well as administrative cost; there is no significant compliance cost for the typical real property tax.

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Definitions:

Doughnuts

Doughnuts are a type of fried dough confectionery or dessert food, often circular with a hole in the center, but can come in various shapes and sizes.

Coffee

A beverage made from the roasted and ground beans of the Coffea plant, known for its stimulating effects due to caffeine.

Good

An item or service that is produced for sale or use.

Income Effect

Alterations in the financial state of individuals or economies and how these changes drive the demand for various goods or services.