Social Compact and Taxes Quiz
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Questions and Answers

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?

<p>Tax base, tax rate structure, and incidence of tax liability.</p> Signup and view all the answers

What should guide the decisions governments make regarding taxation?

<p>General principles of taxation</p> Signup and view all the answers

What do taxes aim to fund for the benefit of society as a whole?

<p>General expenditure like education, health, and housing</p> Signup and view all the answers

What is the tax base?

<p>The amount on which tax is imposed</p> Signup and view all the answers

How does tax legislation impact the tax base?

<p>It can exclude certain amounts from the tax base.</p> Signup and view all the answers

What are the three types of tax bases mentioned in the text?

<p>Income, wealth, consumption</p> Signup and view all the answers

What happens after determining the tax base?

<p>A percentage or unit is applied to determine the tax liability.</p> Signup and view all the answers

How does economic income relate to the amount subjected to tax?

<p>Economic income will not always be equal to the amount subjected to tax.</p> Signup and view all the answers

What does a wealth tax base consist of?

<p>The value of assets or property of a taxpayer.</p> Signup and view all the answers

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