Explain the argument that consumption is the best tax base. ...

[rachel9]

Explain the argument that consumption is the best tax base. Explain the argument that wealth is the best tax base. Explain the argument that income is the best tax base.
 
  In your opinion, which measure is the best tax base - consumption, income, or wealth? Why?

Question 2

Refer to Figure 4-1. Arnold's marginal benefit from consuming the third burrito is
 
  A) 1.25. B) 1.50. C) 2.50. D) 6.00.

[Viet Thy]

Answer to Question 1

The argument that consumption is the best tax base rests on the notion that people should be taxed on what they take out of the common pot. Another argument is that a tax on consumption does not lead to double taxation of saving. The argument that wealth is the best tax base rests on the idea that an individual's command over resources comes from his or her accumulated wealth, not his or her yearly income. The argument that income is the best tax base is based on the argument that income is the best measure of an individual's capacity to command resources today. A tax on income would be a tax on the individual's ability to draw from the common pot. Answers to the last part will vary.

Answer to Question 2

B