Question

The state of Indiana is considering changing its personal income tax laws to allow parents to reduce their tax owed by the cost of infant car seats.

Which of the following statements is false?

		The amendment creates a tax preference for parents who purchase infant car seats
		The amendment is intended to change social behavior
		The amendment increases the neutrality of the tax law
		All of the above are false statements

Answer 1

In the given question, the third statement is false.

The first statement is true as parents who purchase infant car seats will be paying less tax which creates a preference.

The second statement is true as it will indeed change social behaviour as parents will be more inclined to purchase infant car seats to get the tax benefit.

The third statement is false as it will not increase neutality as instead of only economic reasons, people would be making decisions more now for the purpose of getting tax benefits i.e.i this case, purchasing infant car seats.