Taxing any product or activity makes it less attractive and gives people less incentive to purchase.
The calculation and payment of a tax should be easy for a taxpayer to understand. Welfare Loss Of Taxation: The decreased economic well-being caused by the imposition of a tax. The cost required to collect taxes should be low, so that the net receipts resulting from them are as high as possible. These exemptions are only intended to encourage certain types of behavior, usually involving economic development. This is one of the main ideas behind taxation: that public goods should. Horizontal equity should apply to individuals considered. For example, those who use a certain road system should pay for maintaining those roads. Horizontal equity is an economic theory that states that individuals with similar income and assets should pay the same amount in taxes. A tax incentive is the use of taxes to influence economic behavior. Limited ExemptionsĪny exemptions from a tax should be for a limited period of time and for a specific purpose, after which the exemptions are eliminated. The benefits received principle of taxation is the theory that citizens who have received advantages from the government (in the form of public goods and services) should pay for them. The benefits-received principle of taxation holds that people who benefit. Further, the tax should not favor one group over another, so that one group receives a tax benefit at the expense of another group. The type of tax imposed should present an equal burden on all taxpayers in the same economic condition. The level of taxation should approximately match the amount of projected expenditures, so that the governing entity is prudent in covering its costs, but does not tax an excessive amount.
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