What are tax loopholes and what are their effects?
A tax loophole is a special provision in the tax code that reduces taxation below normal rates (perhaps to zero) if certain conditions are met. They can exist for several reasons: One is a perceived need for horizontal or vertical equity. A second is that a person, firm, or industry has engaged in effective rent seeking and has obtained a tax advantage. The effects of loopholes are to encourage particular patterns of behavior and/or to discourage other patterns of behavior. Many loopholes benefit the wealthy; this tends to erode the progressivity of a progressive income tax.
You might also like to view...
In general, the labor supply curve
A) is perfectly elastic at the equilibrium wage rate. B) is vertical at the equilibrium wage rate. C) slopes upward because as the wage rises the opportunity cost of leisure increases. D) slopes downward because firms will hire fewer workers at higher wages.
Tertiary employment tended to require generalized education and/or training and, therefore, it was found primarily in rural areas
Indicate whether the statement is true or false
If a dominant firm charged a very high price for its product, the firm ________ face scrutiny by the European Union competitive laws and ________ face scrutiny by the United States antitrust agencies.
A) would not necessarily; would B) would; would not necessarily C) would not necessarily; would not necessarily D) would; would
Brazil is able to produce 10 cars and 5 computers in one hour while India is able to produce 1 car and 4 computers in one hour. Brazil has an absolute advantage in producing _________________________.
a) cars and computers b) none of the two goods c) computers d) cars