Extra Fiscal Welfare

Question 1

in terms of a fair tax system, what is progressive vs regressive

Answer 1

fair tax system should be progressive rather than regressive (those with more should pay more %)

Question 2

in terms of a fair tax system, what is horizontal equity ?

Answer 2

treat those in same situation in same way

Question 3

in terms of a fair tax system, what is vertical equity

Answer 3

treat those w/ different capacity differently

Question 4

what are 2 other key principles in design of fair tax systems?

Answer 4

• should create incentives for economic activity

- should be transparent, accountable, and easy to administer

Question 5

give an example of horizontal fiscal inequity

Answer 5

states and territories don’t agree on share of funds

Question 6

who is the largest receiver of income tax

Answer 6

commonwealth

Question 7

who is the largest provider of services?

Answer 7

states and territories (vertical fiscal imbalance?)

Question 8

in terms of where do taxes go, local governments are often left with?

Answer 8

the most blunt forms of income generation