Introducing Supply and Demand

Taxes

Elements of a Good Tax System

  • Efficient: A tax system should raise the necessary revenues without unduly burdening the taxpayer.
  • Understandable: A tax system should be easily understandable by the average citizen who has to pay the tax.
  • Equitable: The tax burden should be distributed equitably among a nation's citizens. Generally, this means that those that are wealthier should pay more.
  • Benefit Principle: Generally, the people who use public services should pay for them with higher taxes. However this principle is difficult to enforce in practice.