Question

Advocates of small businesses often argue that they should receive special tax treatment. Assume that small businesses had to pay only half the Social Security tax that is imposed on large corporations. What effect would that have on production efficiency?

Answer 1

The effect that the tax will have on production efficiency is that it will lead to more production and revenue.

What is a tax?

It should be noted that a tax simply means a compulsory levy that's imposed on the citizens and businesses by the government.

In this case, the effect that the tax will have on production efficiency is that it will lead to more production and an increase in revenue.

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