Answer to Question #145125 in Macroeconomics for December

Question

12. Which one of the following statements regarding taxation is correct?
[1] Neutrality of tax means that compliance and administration costs are kept as low as possible.
[2] Taxes which induce taxpayers to change their behaviour are not neutral.
[3] The aim of taxes is to distort relative prices and change the behaviour of taxpayers.
[4] The tax burden is spread equally amongst taxpayers.

Answer 1

[2] Taxes which induce tax payers to change their behavior are not neutral