When the Government Reduces My Income Tax by $0

question 346

Multiple Choice

When the government reduces my income tax by $0.30 for every $1.00 that I contribute to a charity, the government is effectively

• A)alleviating the negative externalities that are associated with charitable giving.
• B)imposing a negative externality on those who do not pay income taxes.
• C)encouraging a private solution to a positive-externality problem.
• D)encouraging a private solution to a negative-externality problem.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including material and labor costs.

Consolidated Income Statement

A comprehensive income statement that combines the financial performance of a parent company and its subsidiaries into a single document.

Impairment Loss

A reduction in the recoverable value of an asset below its carrying amount, requiring the asset's value to be written down.

Effective Tax Rate

The mean rate at which a person or business is charged with taxes, determined by dividing the total amount of taxes paid by the amount of income that is subject to tax.