Question

1) Describe the differences between the benefits-received and the ability-to-pay principles of taxation.

2) Which philosophy is more evident in our present tax structure? Please explain.

3) To which principle of taxation do you subscribe? Why? Again, please explain.

4) Are tax reform measures such as the "flat tax" and/or "fair tax" viable solutions to our current structure? Why, or why not?

Answer 1

According to the benefit theory the burden of taxation should be divided among the people in proportion to the benefit received from the state.The person received equal benefits from state should pay equal amount of taxes,and who received greater benefits should pay more as taxes than those getting less benefit. And ability to pay is each person should contribute to the state in proportion to his ability to pay.Man difference between compensation and benefit lies in the aspect monetary value.Ability to pay is more evident in present tax structure it is most generally accepted theory.adam Smith develop 4 famous cannon of taxation 1 taxation 2 ability 3convenince 4economy. The most important source of government revenue tax.A flat tax is a income tax system in which everyone pays the same tax rate regardless of how much income they have a consistent tax rate applied to all tax beakers. .And Fair tax is a plan is a sales tax proposal to replaced the current U.S.income tax structure A group knownas American for fair taxation developed the fair tax act 2003.The difference is that only of them is accurately describe.Fair tax is formal proposal rather than a generic term.And people like fair tax because it is eliminate taxes on payroll and income it is considered more fair than a progressive income.Are tax reforms measure such as the Fair tax is viable solution to our current structure.proposed amendment to tax laws that seeks to abolish Federal and state income tax.And fair tax into our country would allow the federal government to regulate.So fair tax viable solution to our current structure.