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

question 132

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:

Merchandise Inventory

Goods or stock held by a business for the purpose of resale to customers.

Purchase Discounts

Reductions in price given by suppliers for early payment or bulk purchasing.

Controlling Account

A general ledger account that summarizes the total balances of several subsidiary accounts.

Accounts Payable

Liabilities to suppliers or creditors for items or services purchased on credit.