Question 1
The benefits-received principle of taxation is
not often used because
◦ if tax payments are linked to the benefits received, taxpayers tend to overstate the benefits that they receive from public goods.
◦ it leads to an overproduction of public goods.
◦ it is difficult to determine the values individual taxpayers place on goods and services that are produced using tax revenue.
◦ it leads to less equality in the after-tax distribution of income.
Question 2
A theory of taxation that states that citizens should bear tax burdens in line with their ability to pay taxes is the
◦ ability-to-pay principle.
◦ equity principle.
◦ benefits-received principle.
◦ equal payment principle.