7.Taxation

How can most taxes be classified? Most taxes can be classified as proportional, progressive, regressive.

How to avoid the burden of paying a tax? The burden of paying a tax can be ded if the amount of tax is passed on to someone else.

What are sales and value-added taxes? Sales tax: a regressive tax added to the price of goods and services at the time they are sold. Value-added tax is a tax levied the value added to goods at every stage of production.

What are the main purpose of collecting taxes?  the principal purpose of taxes is to pay for the cost of government

What are the principles of taxation?  Most economists believe that a tax system should follow two main principles: the ability-to-pay principle and the benefits- received principle.

What are the two kinds of tax-shifting?  shifted forward, shifted backward.

What do governments increase or decrease taxes for? governments can increase or decrease taxes to achieve social and economic goals.

What do governments use tax revenues? Governments tax revenues to use pay soldiers and police, to build roads and bridges, to control schools and hospitals, to provide food to the poor and medical care to the elderly

What does progressive taxation mean?  A proportional tax takes percentage of all incomes regardless of size.

What does the ability-to-pay principle state?  The ability-to-pay principle of taxation states that taxes ought to be paid by those who can best afford them, regardless of the benefit s they receive.

What does the benefits-received principle state? The benefits-received principle of taxation states that those who benefit from a government program are the ones who ought to pay for it

What does the tax incidence depend on? The incidence of the tax depends on how buyers and sellers of the commodity respond when the tax is imposed. 

What excites considerable controversy when it comes to taxation? the questions of which taxes and in what amounts people have to it pay.

What is a peculiar feature of a progressive tax?  A progressive tax takes a larger percentage of a higher income and a smaller percentage of a lower income - rich people not only pay a large amount of money than poor people, but a larger fraction of their incomes.

What is a progressive tax? Progressive tax: a tax that takes more money from people with higher incomes than from people with lower incomes.

What is a property tax? Property tax: a tax based on the value of property owned by the taxpayer. 

What is a proportional tax?  Proportion tax: a tax in which the amount of tax paid is proportional to the size of taxable income.

What is a tariff? What is it used for? Tariff a tax imposed on goods on which country's government requires special payment on being imported into that country

What is a tax shifting? The process of transferring the tax burden is known as tax-shifting.

What is an excise tax? Excise tax(duty): a tax charged on certain goods and services produced and sold within the country, such as alcoholic drinks and tobacco products 

What is an incidence of the tax? The way a tax affects people is called the tax incidence.

What is an income tax?  Income tax: a tax on the income earned by individuals and corporations 

What is the most important source of income for modern governments? Taxes are the most important source of revenues for modern governments.

What percentage does a regressive tax take of a person’s income? A regressive tax takes a lower percentage of income as income rises- poor people pay a larger share of their incomes in taxes than rich people. 

What questions should be focused on in comparing the merits of one tax to another? In comparing the advantages of one tax over anothe, it is convenient to focus on the following questions: Who ought to pay taxes? What types of taxes are being considered? Who will actually pay taxes? 

What taxes are called consumption ones? Consumption tax: a tax on certain goods, especially goods that people buy for pleasure or enjoyment rather than those people buy regularly in order to live d on certain.

What taxes are called shifted forward? Taxes passed on to consumers are called shifted forward

What types of taxes do governments impose? Governments impose many types of taxes. In most democracies, individuals pay income taxes when they earn money, consumption taxes such as excise tax, sales taxes, and value-added taxes when they spend it, property taxes when they own a home or land, and some others.

When are taxes shifted backward? Taxes are called shifted backward when suppliers or workers who produced the products are forced to assume the burden of taxes.

Which tax is the fairest? As for me, progressive tax is the fairest tax because in regressive tax low-income families or disabled bear the costs of the program designed to help them.

Why do sales taxes and value-added taxes have a regressive effect? The sales and VAT have regressive effect because they take a larger share of earning from a low-income taxpayers than from a high-income taxpayer.

Why is it difficult to determine which groups should pay taxes for public goods and services and which should not? Taxes should be based on taxpayer's ability to pay that is measured by their income wealth. And people with equal or opportunities must pay the same amount of tax.

Why is it important to know who really bear a tax burden? That to know with whom to levy tax.

Why is taxation an important way-for maintaining the stability of a nation`s economy? Sometime taxes are levied to protect selected industries by imposing(a tax on imports), to discourage activities the government believes to harmful to society or encourage activities which benefit it.

Why is the benefits-received principle considered to be unfair?

Why should people with different incomes be taxed at different tax rates? Because person with higher income should pay more on taxes then one with less, because people with higher income take a larger share of earning from a low- income taxpayers.