The "ability-to-pay" principle of taxation is the normative idea that
A) an equitable tax system is one in which high income individuals should bear a greater burden of taxes than low income individuals.
B) two individuals earning the same income should have equal ability to pay, all else constant.
C) each individual should voluntarily contribute according to her ability to pay taxes.
D) progressive taxes are more equitable than regressive taxes.
A
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When a nation is economically integrated with trading partners, fixed exchange rates:
A) would be very harmful to the dynamic nature of trade. B) could promote integration and economic efficiency by keeping transaction costs low. C) would be the best choice if that nation became the dominant nation in the transactions. D) would be adequate but have the disadvantage of discouraging trade because of uncertainty.
The one uncontroversial statement at the foundation of "supply-side" theory is that
A) cutting income tax rates raises the tax base by enough to increase tax revenues. B) income taxes reduce the after-tax reward to work and saving. C) reducing income taxes would significantly increase work effort. D) reducing income taxes would significantly increase personal saving.