Question

what is the definition on lumpsum tax
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Answer 1

WHAT IS A LUMP SUM TAX?

• A tax in which the taxpayer is assessed the same amount regardless of circumstance.
• It is based on a fixed amount.

WHY IS LUMP SUM TAX USEFUL?

• It does not reduce people's incentive to work.
• The tax does not vary with their income.
• The government does not need any information about a person's income.

WHAT IS THE LUMP SUM PRINCIPLE?

• It states that a tax on a person's general purchasing power is more efficient than a tax on specific goods.