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          • Term
            • lump-sum tax
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          • Definition(s)
            • A tax that is the same amount for everybody, regardless of income or wealth. Some economists argue that this is the most efficient form of TAXATION, as it does not distort incentives and thus it has no DEADWEIGHT COST. This is because each person knows that whatever they do they will have to pay the same amount. It is also cheap to administer, as there is no complex process of measuring each person's INCOME and ASSETS in order to calculate their tax bill. The Economist
          • Example sentence(s)
            • The lump-sum tax system is superior if there are no errors in classifying individuals but, when enough mistakes are made, income taxation may be the preferred system. - Science Direct by
            • Iowa lump-sum tax applies only if federal form 4972 was used to compute the federal tax on any portion of the lump-sum distribution. - Iowa Department of Revenue by
            • The lump-sum tax is calculated upon the annual expenses borne by the applicant individual considering his or her standard of living, as well as by those people he or she takes care of. These expenses represent the taxable base for the computation of the tax due. - modaq by
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