What should happen to the current level of taxes

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Tax Smoothing or Strategic Tax Policy? Assume the pressures of an aging population and increases in health-care costs will increase total federal spending in the future significantly.

a. Under the theory of tax smoothing, what should happen to the current level of taxes if future spending is scheduled to rise?

b. Now suppose future spending increases are not inevitable and that, as a practical matter, you believe Congress will spend whatever revenue it collects. Would you still recommend tax smoothing?

Reference no: EM131130690

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