What is a primary objective of tax policy?

A primary objective of tax policy is indeed to create tax rates that are stable and predictable. Stability and predictability in tax rates enable individuals and businesses to plan their financial activities with greater confidence. When taxpayers can anticipate their tax obligations without unexpected changes, it fosters a more favorable environment for economic growth and investment. Predictable tax rates can also help reduce compliance costs, as taxpayers feel more assured about the long-term implications of their financial decisions.

In contrast, the other options do not reflect the intended goals of effective tax policy. Encouraging tax evasion would undermine the integrity of the tax system and reduce government revenue. Decreasing tax liability for the wealthiest individuals may contradict principles of fairness and equity that are typically central to tax policy. Limiting tax credits to only essential services could restrict the positive incentives and support that tax credits provide to various sectors of the economy, which can also be detrimental to overall economic welfare.