Choosing Allocation Bases for Levying Taxes

question 62

Essay

Choosing Allocation Bases For Levying Taxes
The town of Seaside has decided to construct a new sea aquarium to attract tourist. The cost of the measure is to be paid by a special tax. although most of the townspeople believe the sea aquarium is a good idea, there is disagreement about how the tax should be levied.
Required:
Suggest three different methods of levying the tax and the advantages and disadvantages of each.

Calculate and understand the significance of average tax rates.

Analyze the impact of taxation on income distribution.

Understand the principles underlying taxation, including the ability-to-pay and benefits-received principles.

Identify the components and determinants of taxable income.

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Definitions:

Nature

The physical world collectively, including plants, animals, landscapes, and other features and products of the earth as opposed to humans or human creations.

Land Rent

Payment made for the use of land, typically based on its productivity, location, and the competitive demand for land use.

Acres

A unit of measurement used primarily in the U.S. to describe the size of land, equating to 43,560 square feet.

Economic Rents

Extra earnings or return above the normal expected return of an investment or economic activity.