Question : What is the purpose of a tax credit?
Option 1: To decrease the amount of taxes owed by an individual or corporation
Option 2: To increase the amount of taxes owed by an individual or corporation
Option 3: To decrease the amount of government spending on social welfare programs
Option 4: To increase the amount of government revenue
Correct Answer: To decrease the amount of taxes owed by an individual or corporation
Solution : The correct answer is (a). To decrease the amount of taxes owed by an individual or corporation.
A tax credit is a financial incentive provided by the government to individuals or corporations that reduces the amount of taxes they owe. It is a direct reduction in the tax liability and is applied after the tax calculation has been made. Tax credits can be available for various purposes, such as promoting certain activities, stimulating economic growth, supporting specific industries, or providing assistance to individuals or families.
Tax credits are designed to incentivize certain behaviors or actions that the government deems beneficial to society or the economy. By reducing the amount of taxes owed, tax credits aim to encourage individuals or corporations to engage in activities that align with the government's policy objectives. Examples of tax credits include child tax credits, education credits, energy-efficient home credits, and research and development credits.
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