a. According to the benefits-received principle of taxation, O the higher one's income, the higher the tax, and the higher the percentage of one's income paid in tax. O the lower one's income, the lower the tax, and the higher the percentage of one's income paid in tax. O those who make use of government services should pay for them. O everyone should pay for government services. b. According to the ability-to-pay principle of taxation, everyone should pay for government services. O those who make use of government services should pay for them. O the higher one's income, the higher the tax, and the higher the percentage of one's income paid in tax. O the lower one's income, the lower the tax, and the higher the percentage of one's income paid in tax. c. Which of the following statements is true? O The lower one's income, the lower the tax, and the higher the percentage of one's income paid in tax, which is unfair to tho with restricted income. O Redistribution of income by government-transfer payments-would be impossible with the ability-to-pay principle. O Redistribution of income by government-transfer payments-would be impossible with the benefits-received principle. O The lower one's savings, the lower the tax, and the lower the percentage of one's income paid in tax, which is unfair to those with restricted income.
a. According to the benefits-received principle of taxation, O the higher one's income, the higher the tax, and the higher the percentage of one's income paid in tax. O the lower one's income, the lower the tax, and the higher the percentage of one's income paid in tax. O those who make use of government services should pay for them. O everyone should pay for government services. b. According to the ability-to-pay principle of taxation, everyone should pay for government services. O those who make use of government services should pay for them. O the higher one's income, the higher the tax, and the higher the percentage of one's income paid in tax. O the lower one's income, the lower the tax, and the higher the percentage of one's income paid in tax. c. Which of the following statements is true? O The lower one's income, the lower the tax, and the higher the percentage of one's income paid in tax, which is unfair to tho with restricted income. O Redistribution of income by government-transfer payments-would be impossible with the ability-to-pay principle. O Redistribution of income by government-transfer payments-would be impossible with the benefits-received principle. O The lower one's savings, the lower the tax, and the lower the percentage of one's income paid in tax, which is unfair to those with restricted income.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:### Taxation Principles: An Overview
#### A. Benefits-Received Principle of Taxation
This principle suggests that the people who use government services should be the ones who pay for them. The possible responses to this principle include:
- The higher one's income, the higher the tax, and the higher the percentage of one's income paid in tax.
- The lower one’s income, the lower the tax, and the higher the percentage of one's income paid in tax.
- **Those who make use of government services should pay for them. (Correct Answer)**
- Everyone should pay for government services.
#### B. Ability-to-Pay Principle of Taxation
According to this principle, the tax contribution is based on an individual’s capacity to pay, regardless of the services used. The possible responses include:
- **Everyone should pay for government services. (Correct Answer)**
- Those who make use of government services should pay for them.
- The higher one's income, the higher the tax, and the higher the percentage of one's income paid in tax.
- The lower one's income, the lower the tax, and the higher the percentage of one's income paid in tax.
#### C. Evaluating True Statements
This section asks which of the following statements is valid:
- The lower one’s income, the lower the tax, and the higher the percentage of one's income paid in tax, which is unfair to those with restricted income.
- Redistribution of income by government—transfer payments—would be impossible with the ability-to-pay principle.
- **Redistribution of income by government—transfer payments—would be impossible with the benefits-received principle. (Correct Answer)**
- The lower one’s savings, the lower the tax, and the lower the percentage of one's income paid in tax, which is unfair to those with restricted income.
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