Explain Principles Of Taxation With The Help Of Benefits Vs. Ability To Pay Principle?


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Anonymous Profile
Anonymous answered
Explain critically any two principle of taxation
Tariq Habib Profile
Tariq Habib answered
Once the government has decided to collect some amount of taxes, it has a bewildering array of possible taxes available to it. It can tax income, tax profits, or tax sales. It can tax the rich or tax the poor, tax the old or tax the young. Are there any guidelines that can help construct fair and efficient tax systems? Indeed there are. Economists and political philosophers have proposed two major principles for organizing a tax system:
The benefit principle, which holds that different individuals should be taxed in proportion to the benefit, they receive from government programs. Just as people pay private dollars in proportion to their consumption of private bread, a person's taxes should be related to his or her use of collective goods like public roads or parks.
The ability to pay principle, which states that the amount of taxes people pay should relate to their income or wealth. The higher the wealth or income, the higher the taxes. Usually tax systems organized along the ability to pay principle are also redistribute, meaning that they raise funds from higher income people to increase the incomes and consumption of poorer groups.

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