A Major Criticism of Static Tax Analysis Is That It

question 131

Multiple Choice

A major criticism of static tax analysis is that it

• A) uses only ad valorem taxes.
• B) does not use ad valorem taxes.
• C) ignores the incentive effects created by higher tax rates.
• D) assumes that the tax base will not increase.

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Definitions:

Cognitive Biases

Systematic patterns of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion.

Motivational Biases

Distortions in perception or judgment caused by personal desires, needs, or emotions rather than evidence or reason.

Authority

A recognized or official power or right to make decisions, dictate actions, or enforce obedience.

Credibility

The quality or power of inspiring belief; how trustworthy or believable a person, concept, or piece of information is perceived to be.