12 Questions
What is the relationship between a government and its citizens referred to as?
The social compact
How are taxes defined?
Compulsory payments imposed on citizens to raise revenue for the benefit of society.
What are policies in the context of the text?
Courses of action taken by governments to achieve their objectives.
What are the three decisions that governments make when formulating a tax policy?
Tax base, tax rate structure, and incidence of tax liability.
What should guide the decisions governments make regarding taxation?
General principles of taxation
What do taxes aim to fund for the benefit of society as a whole?
General expenditure like education, health, and housing
What is the tax base?
The amount on which tax is imposed
How does tax legislation impact the tax base?
It can exclude certain amounts from the tax base.
What are the three types of tax bases mentioned in the text?
Income, wealth, consumption
What happens after determining the tax base?
A percentage or unit is applied to determine the tax liability.
How does economic income relate to the amount subjected to tax?
Economic income will not always be equal to the amount subjected to tax.
What does a wealth tax base consist of?
The value of assets or property of a taxpayer.
Test your knowledge on the social compact between government and citizens, focusing on the responsibilities related to taxes. Explore the concept of taxes as compulsory payments used to fund public goods and services for society.
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