Which of Adam Smith's Requirements for a Good Tax System

question 2

Multiple Choice

Which of Adam Smith's requirements for a good tax system best supports the argument that the federal income tax rate structure should be progressive?

• A)Certainty.
• B)Convenience.
• C)Equality.
• D)Neutrality.
• E)Sufficiency.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds; interest expense is often deductible for the borrower for tax purposes.

Inflation

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Stockholders' Equity/Total Assets

A ratio expressing the proportion of a company's assets that are financed by shareholders' equity.

Long-Term Debt/Stockholders' Equity

A financial ratio that measures a company's leverage by comparing its long-term debt to its stockholders' equity.