Judging the sufficiency of a tax system is best described by which of the following?

• A. Assessing whether the tax system treats all taxpayers equally regardless of income
• B. Examining if the tax system encourages economic growth
• C. Determining if the tax system minimizes administrative costs
• D. Evaluating whether the tax system raises enough revenue to meet government expenditure needs

Answer: (D)

Verified step by step guidance

1. Understand the concept of tax sufficiency: Tax sufficiency refers to the ability of a tax system to generate enough revenue to cover the government's spending requirements without causing deficits.
2. Identify the key criteria for judging tax systems: Common criteria include equity (fairness), efficiency (economic growth encouragement), administrative simplicity (low costs), and sufficiency (revenue adequacy).
3. Focus on sufficiency specifically: Since sufficiency is about revenue adequacy, the main question is whether the tax system raises enough funds to meet government expenditure needs.
4. Compare the options given: Assessing equality relates to equity, encouraging growth relates to efficiency, minimizing costs relates to administrative simplicity, and raising enough revenue relates to sufficiency.
5. Conclude that judging the sufficiency of a tax system is best described by evaluating whether the tax system raises enough revenue to meet government expenditure needs.