Asked by Taylor Giardinelli on Jun 19, 2024
Verified
The rationale for ability-to-pay taxation and the contention that those with large incomes should pay more taxes both absolutely and relatively is that
A) high-income receivers are generally in a better position to shift taxes than are low-income receivers.
B) the transfer system is regressive and it is therefore essential to have an offsetting progressive tax structure.
C) rational consumers spend their first dollars of income on the most urgently desired goods and successive dollars on less essential goods.
D) taxes should be paid for financing public goods in direct proportion to the satisfaction an individual derives from those goods.
Ability-to-pay Taxation
A principle of taxation based on the belief that taxes should be levied according to an individual’s or entity’s capacity to pay, reflecting their income or wealth.
Progressive Tax Structure
A tax system in which the tax rate increases as the taxable amount increases, typically designed to distribute the tax burden more heavily on those with higher incomes.
High-income Receivers
Individuals or entities that receive a significantly higher amount of income compared to the median or average levels within a society or economic system.
- Digest the foundational concepts and types of taxation frameworks, such as regressive, progressive, proportional, and benefits-received taxation.
Verified Answer
JA
Jairo AldanaJun 20, 2024
Final Answer :
C
Explanation :
The rationale is based on the concept that individuals prioritize their spending, with initial income going towards more essential needs. As income increases, the marginal utility of money decreases, suggesting those with higher incomes can afford to pay more in taxes without sacrificing essential needs.
Learning Objectives
- Digest the foundational concepts and types of taxation frameworks, such as regressive, progressive, proportional, and benefits-received taxation.