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.
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In an economist's view, a cartel usually offers to society
a. all the cost benefits of large-scale production and none of the allocative inefficiencies of monopoly. b. all the cost benefits of large-scale production and all of the allocative inefficiencies of monopoly. c. none of the cost benefits of large-scale production and none of the allocative inefficiencies of monopoly. d. none of the cost benefits of large-scale production and all of the allocative inefficiencies of monopoly.
The Board of Governors is made up of experts in:
A. finance and banking. B. public policy C. fiscal policy. D. accounting standards.