Asked by Bryce Johnson on Jul 20, 2024
Verified
Tax expenditures allow the government to
A) enact legislation that benefits those most underrepresented in the system.
B) reduce the money supply by controlling who pays taxes.
C) subsidize certain taxpayers at the expense of others.
D) establish a ceiling on the amount of money it can spend.
Tax Expenditures
Government losses in tax revenue due to exemptions, deductions, credits, and preferential tax rates.
Subsidize
To support an organization, activity, or economic sector by providing financial assistance, often from the government to keep prices low or to ensure it continues to operate.
- Differentiate among means-tested benefits, entitlement programs, tax expenditures, and their effects on government's fiscal strategy.
Verified Answer
SM
Sarah MacchiaJul 22, 2024
Final Answer :
C
Explanation :
Tax expenditures are reductions in tax liabilities granted to certain taxpayers, effectively subsidizing them by reducing their tax burden, often at the expense of broader tax base. This can include deductions, exemptions, and credits for specific activities or investments.
Learning Objectives
- Differentiate among means-tested benefits, entitlement programs, tax expenditures, and their effects on government's fiscal strategy.
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