The "Ability-To-Pay" Principle of Taxation Is the Normative Idea That

question 28

Multiple Choice

The "ability-to-pay" principle of taxation is the normative idea that

• A)an equitable tax system is one in which high income individuals should bear a greater burden of taxes than low income individuals.
• B)each individual should voluntarily contribute according to her ability to pay taxes.
• C)progressive taxes are more equitable than regressive taxes.
• D)two individuals earning the same income should have equal ability to pay, all else constant.

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Definitions:

Current Liability

Financial obligations that a company is required to pay within one year.

Advance From Customers

Money received by a company from customers before the related goods or services have been delivered.

GAAP

Generally Accepted Accounting Principles, a standard framework of guidelines for financial accounting.

Payroll Bank Account

A separate bank account used by businesses specifically for processing payroll transactions, ensuring that funds are available for employee wages and related taxes.