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Questions and Answers
According to the theory of taxation, why do people pay taxes?
According to the theory of taxation, why do people pay taxes?
- To avoid punishment
- To receive benefits from the government
- To contribute to a civilized society
- To support the government financially (correct)
Which theory of taxation considers the taxpayer's capacity to pay?
Which theory of taxation considers the taxpayer's capacity to pay?
- Benefit-Received Theory
- Ability to Pay Theory (correct)
- Vertical Equity
- Horizontal Equity
What does the lifeblood doctrine of taxation state?
What does the lifeblood doctrine of taxation state?
- Taxes are necessary for a civilized society
- Taxes should be collected from all citizens
- Taxes serve as the blood of government (correct)
- Taxes should be used to benefit the taxpayers
What is the inherent power of the state in relation to taxation?
What is the inherent power of the state in relation to taxation?
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Which theory of taxation is directly proportional to a taxpayer's salary?
Which theory of taxation is directly proportional to a taxpayer's salary?
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Study Notes
Reasons for Paying Taxes
- Taxes are paid to fund government services and public goods, such as infrastructure, education, and healthcare.
- Taxes are also used to redistribute wealth and reduce economic inequality.
Capacity to Pay Theory
- The ability-to-pay theory suggests that taxes should be levied according to an individual's capacity to pay.
- This theory emphasizes fairness in taxation, aligning tax burdens with taxpayers' financial capabilities.
Lifeblood Doctrine of Taxation
- The lifeblood doctrine asserts that taxation is essential for the survival and functioning of the government.
- It metaphorically describes taxes as the lifeblood that sustains governmental operations and public services.
Inherent Power of the State
- The government possesses inherent power to impose taxes as a fundamental aspect of its sovereignty.
- This power allows the state to regulate and generate revenue, crucial for maintaining order and providing public services.
Proportional Taxation Theory
- The progressive taxation theory indicates that tax rates increase as an individual's income increases.
- This means higher earners pay a larger percentage of their income in taxes compared to lower earners.
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