The three criteria’s for an effective
tax system are equity, simplicity, and efficiency. Equity is that taxes should
be impartial and just. Simplicity is when tax laws should be written so that
both taxpayers and tax collectors can understand them. Efficiency is when a tax
should be relatively easy to administer and reasonably successful at generating
of progressive Tax, proportional tax and regressive tax. Progressive tax is tax
rate that changes depending on taxpayer’s income. Proportional tax is every taxpayer
that pays the same tax rate but not the same amount of tax. Regressive tax is
taxpayers with lower income pay a higher tax rate than those
with higher income.
The main points of the two
principles of taxation are benefit principle and ability to pay principle. Benefit
principle is the theory of taxation from public finance. Ability to pay
principle is maintains that taxes should be levied according to a taxpayer’s
ability to pay.
Sin tax is a state tax that is added to products or
services, such as alcohol, tobacco and gambling. The significance is that the
government tries to discourage people from involving themselves in such
National debt is the resulting federal government borrowing
money to cover for many years of budget deficits. Federal deficit is spending
the greater than the revenue received for that year.