Taxes Can Create Deadweight Losses Because They

question 67

Multiple Choice

Taxes can create deadweight losses because they

• A)allow the government to fund private goods.
• B)create administrative burdens as people comply with tax laws.
• C)allow the government to fund public goods.
• D)Both b and c are correct.

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Definitions:

Interest Received

The amount earned from interest-bearing accounts or investments, such as savings accounts or bonds, which is usually taxable income.

Itemized Deductions

Deductions from taxable income that occur when taxpayers list out specific allowable expenses on their tax return.

State Taxes Paid

State Taxes Paid includes any taxes that individuals or businesses pay to state governments, which can include income tax, sales tax, and property tax.

Tax Return

A formal document filed with a government body, reporting income, expenses, and other pertinent tax information, used to calculate tax liability.