Tax policy often trades off efficiency and equity. That is, many tax reform proposals that improve efficiency have the effect of reducing vertical equity. Explain how both of the following improve efficiency but reduce vertical equity.

a. A flat tax

b. Ramsey-rule commodity taxation

Answer rating: 100% (QA)

Efficiency is as important as equity to achieve a good tax system A tax system is said to be efficient when the efficient allocation of resources does ... View the full answer