What makes a tax ‘good’ in light of the general principles of taxation?
The General Principles of Taxation:
• Equity
• Neutrality
• Fairness (distributive outcome & social justice)
• Paternalism
• Administrative Efficiency
• Progressive, proportionate or, regressive
Thesis: Ultimately, a good tax is one which obtains appropriate distributive outcomes and is in furthermore of appropriate visions of social policy (social justice; outcome). In doing so, due regard should be had for concepts of progressivity, certainty, and administrative efficiency. The tax should not be regressive unless it must be (i.e. consumption taxes), nor should it be proportional. However, less weight should be attached to concerns of neutrality, equity, and paternalism (less regard should be given; i.e. Paternalism should be accepted to an extent, a liberal approach would be naive).
Examples of matters to discuss: Not exhaustive
1. Benefit Principle and ability to pay
2. Substitution effect
3. Advantages and disadvantages of a progressive tax system?
4. When is it appropriate to depart from the neutrality principle or equity etc.?
5. Is there really horizontal equity? Is anyone truly on the same level? Two people might have the same amount of income but the way in which it was received is different. For example, one got 100$ in an hours work and another in a weeks work.
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