Questions and Answers
What are the criteria for effective taxes?
What type of tax imposes a higher percentage rate of taxation on higher incomes than on lower ones?
What is the type of tax levied on most consumer purchases?
What type of tax imposes the same percentage rate of taxation on everyone, regardless of income?
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What is the type of tax that imposes a higher percentage rate of taxation on low incomes than on high incomes?
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Study Notes
Criteria for Effective Taxes
- Equity, simplicity, and efficiency are the essential criteria for effective taxes.
Types of Taxes
- Sales tax is a general tax levied on most consumer purchases.
- Individual income tax is a tax on people's earnings, which is a complex tax.
Tax Systems
- There are three types of tax systems: Proportional Tax, Progressive Tax, and Regressive Tax.
Proportional Tax
- Proportional Tax imposes the same percentage rate of taxation on everyone, regardless of income.
Progressive Tax
- Progressive Tax imposes a higher percentage rate of taxation on higher incomes than on lower ones.
Regressive Tax
- Regressive Tax imposes a higher percentage rate of taxation on low incomes than on high incomes.
Value-Added Tax (VAT)
- Value-Added Tax (VAT) is a tax placed on the value that manufacturers add at each stage of production.
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Description
Understand the key principles of effective taxation, including equity, simplicity, and efficiency. Learn about different types of taxes, such as sales tax, income tax, proportional tax, progressive tax, and regressive tax.
