Taxes

Question 1

What makes a good tax?

Answer 1

• Equitable (richer pay more)
• Economic (profitable)
• Transparent (know what exactly you are paying for
• Convenient (easy to pay)

Question 2

Difference between direct and indirect taxes

Answer 2

Direct
- Paid directly by actor to government from income or revenue
- Includes income tax (people), corporation tax (businesses), and direct tax on wealth (people who own wealth)

Indirect:
- Taxed on goods and services
- Production process paid by sellers at all stages
- Ad valorem tax (% of market value charge by retailer based on assessed value)
- Specific taxes where you have to pay the same at all times