Section 8 Flashcards
With regards to the benefit principal who should be paying more of the taxes
The wealthy should pay more they use police to protect their goods they should pay for anti-poverty programs because reduction poverty needs to lower property crime
What is theability to pay principal mean
Texas should be levied on a person according to how well that person can shoulder the burden
- text responsibility should depend on their income in other circumstances and all citizen should make an equal sacrifice to support the government
With regards to taxes what are the two basic principles
- Benefit principal
2. Ability to pay principle
What is vertical equity
Tax payers with a greater ability to pay taxes should contribute a larger amount
What are the three different models to determine how each person’s your paint under the vertical equity
- Proportional tax
- Regressive tax
- Progressive tax
What is proportional tax
Hi income in though income tax payers pay the same fraction of income
- same percentage i.e. 12% of their income
What is regressive tax
High income tax payers pay a smaller fraction of their income then the income tax payers
- for instance the higher the income the less percentage of their income they would pay
What is progressive tax
High income tax payers pay a larger fraction
The income tax rates would be small for the lower-class individuals or a low percentage and it would increase depending on their income
What is horizontal equity
Tax payers with similar ability should pay the same amount
What is the problem with horizontal equity
How to determine the degree of similarity
How is the goal of equity measured with regards to tax
It’s measured by the tax incidence or how much to pay
What are the benefits to lump sum taxes as well as disadvantage
It is the most efficient
The same amount for everyone
But it’s considered unfair, conflicts with equity
How does the benefit principle coming in to play with equity (advantages)
- used to it achieve equity
- makes Taxes more equitable
- The rich pay more
What are the disadvantages with regards to the benefit principal trying to make taxes more equitable
- it causes disincentives for wealthy to work as much as before because they pay more taxes
- this reduces efficiency
What is the benefit principle
Principle that people should pay taxes based on benefits they receive from the government
