principles of tax system design Flashcards
1
Q
what is a tax base?
A
what to tax eg. income, wealth, capital, consumption
2
Q
what is a tax unit?
A
who to tax eg. individuals, families, companies
3
Q
what is a proportional rate structure?
A
when tax rate stays constant as tax base increases
4
Q
what is a progressive rate structure?
A
when tax rate increases as tax base increases
5
Q
what is a regressive rate structure?
A
tax rate decreases as tax base increases
6
Q
what is the average rate of tax?
A
tax payable / value of tax base
7
Q
what is the marginal rate of tax?
A
rate taxpayer would have to pay on next £1 of tax base
8
Q
which rate structure has AR < MR?
A
progressive
9
Q
which rate structure has AR = MR?
A
proportional
10
Q
which rate structure has AR > MR?
A
regressive
