The Rationale for Ability-To-Pay Taxation and the Contention That Those

question 141

Multiple Choice

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.

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Definitions:

Secondary Effects

Unintended consequences of economic actions that may develop slowly over time as people react to events.

Rent Control

Government regulations that limit the amount landlords can charge for renting out a property and may also restrict the reasons for evicting tenants.

Economy Works

The systematic way in which economic activities are organized and conducted in a society to produce goods and services.

Scientist

A professional engaged in a systematic activity to acquire knowledge, often employing the scientific method in various fields.