BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

Solutions

Chapter
Section
BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Explain the benefits principle and the ability-to-pay principle. • What are vertical equity and horizontal equity? • Why is studying tax incidence important for determining the equity of a tax system?

To determine
Tax system and the equity of a tax system.

Explanation

Benefit principle: According to the benefit principle, individuals should pay taxes based on the benefits they get from the government services. This principle tries to equalize the sacrifice that individuals pay in the form of taxes. In addition, it tries to make public goods similar to private goods.

Ability to pay principle: Ability to pay principle tries to explain that taxes should be levied on a person according to how well that person can shoulder the burden. This principle is based on the two important notions of equity: Vertical equity and horizontal equity.

Vertical equity: The notion of vertical equity states that individuals with greater ability to pay taxes should pay higher amounts...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why is productivity important?

Principles of Economics (MindTap Course List)

List and describe four determinants of a countrys productivity.

Principles of Macroeconomics (MindTap Course List)

Describe the major components of a TQM program.

Foundations of Business (MindTap Course List)

RATIO CALCULATIONS Graser Trucking has 12 billion in assets, and its tax rate is 40%. Its basic earning power (...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)