Asked by
Verified
Lump-sum taxes promote economic efficiency but violate the ability-to-pay principle.
Lump-Sum Taxes
Taxes that are a fixed amount, not dependent on the taxpayer's income or activities, thus they do not distort economic decisions.
Economic Efficiency
A condition where every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.
Ability-To-Pay Principle
The ability-to-pay principle in taxation suggests that taxes should be levied based on an individual's or entity's capacity to pay, meaning those with higher income should pay more.
- Distinguish between diverse taxation policy guidelines, including the benefits principle and the ability-to-pay principle.
- Assess the dichotomy between efficiency and equity within tax policies, and understand the economic foundations behind these choices.
Verified Answer
Learning Objectives
- Distinguish between diverse taxation policy guidelines, including the benefits principle and the ability-to-pay principle.
- Assess the dichotomy between efficiency and equity within tax policies, and understand the economic foundations behind these choices.
Related questions
The Argument for Progressive Taxes Is Based on the Ability-To-Pay ...
Economic Policies Often Involve Trade-Offs Between Efficiency and Equity ...
For a Tax System to Achieve Equity,it Must First Achieve ...
The Benefits Principle Says That Taxes Should Be Used to ...
A Tax System Achieves Efficiency When It Maximizes the Amount ...