What factors contributed to the end of the Bush-era tax cuts in 2013?
While a number of factors contributed to this swing, including the Great Recession, stimulus efforts, supplemental war and other supplemental appropriations, as well as increased security spending, a huge part of the swing—about 16 percent—was due to the Bush tax cuts.
What is the benefit principle of taxation?
The benefit principle is a concept in the theory of taxation from public finance. It bases taxes to pay for public-goods expenditures on a politically-revealed willingness to pay for benefits received.
How do taxes affect people’s behavior quizlet?
Terms in this set (16) Describe how taxes can be used to affect people’s behavior. Taxes can be placed on socially undesirable products to reduce their consumption (sin tax). The third criterion is efficiency, meaning that the tax should be relatively easy to administer and reasonably successful at generating revenue.
What are the limitations of the benefit principle of taxation?
In fact, it is difficult to implement the benefit principle for most public services because citizens generally have no inclination to pay for a publicly provided service—such as a police department—unless they can be excluded from the benefits of the service.
What are the four principles of taxation?
The principles of good taxation were formulated many years ago. In The Wealth of Nations (1776), Adam Smith argued that taxation should follow the four principles of fairness, certainty, convenience and efficiency.
Who should carry the burden of taxation?
When supply is more elastic than demand, buyers bear most of the tax burden. When demand is more elastic than supply, producers bear most of the cost of the tax. Tax revenue is larger the more inelastic the demand and supply are.
What is the lifeblood doctrine of taxation?
Every lawyer worth his or her salt and every accountant, for that matter knows the lifeblood doctrine as a basic principle in taxation, which provides that “the existence of government is a necessity; that government cannot continue without means to pay its expenses; and that for these means it has a right to compel …
What is the difference between tax and penalty?
The difference between a tax, a fee and a penalty is based on the purpose of the revenue. A tax is a levy collected for general government services. A penalty is a levy collected with the express aim of deterring some kind of undesirable behavior.
What is meant by tax avoidance?
Tax Avoidance: Tax avoidance is an act of using legal methods to minimize tax liability. In other words, it is an act of using tax regime in a single territory for one’s personal benefits to decrease one’s tax burden.