Consider the following two taxes: 1) a state imposes a 10 cent tax on every gallon...

Consider the following two taxes: 1) a state imposes a 10 cent tax on every gallon of gasoline sold in the state to pay for road maintenance and improvements, and 2) a state imposes an additional 1% income tax on all state residents to pay for the construction of 50 new soccer fields throughout the state. Which of these two taxes is more consistent with the benefits-received principle? Why?

Solutions

Expert Solution

Ans) Benefit principle states that people should pay taxes based on the benefits they receive from government services.Similarly ,a person who gets great benefit from a public good should pay more for it than a person who gets little benefit .The gasoline tax,is sometimes justified using the benefits principal . In some states as mentioned above revenues from gasoline tax are used to build and maintain road.Because those who buy gasoline are the same people who use the roads,hence the gasoline tax might be viewed as a fair way to pay for this government services and In this case mentioned gasoline tax of 10 percent will reduce the demand of cars and reduce pollution and also the tax revenue spent on the construction of roads will definitely speed up the safety level of people and boost the economy as infrastructure is upgraded.Similarly the benefit principle states that the people who do not play football or don't like football should not pay the taxes hence according to it this is not right,Similarly the people use gasoline consistently as need to travel is huge and on the other hand soccer is seasonal sport hence less consistent.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Suppose the government imposes a tax of $10 on every pair of shoes sold be every...

Suppose the government imposes a tax of $10 on every pair of shoes sold be every seller in Canada. Will the $10 be paid by the seller, the buyer or both? How does the price elasticity of demand affects the incidence of this tax on buyers and sellers?

Consider a government that imposes a personal income tax. It is estimated that the tax will...

Consider a government that imposes a personal income tax. It is estimated that the tax will not affect total labour supplied in the economy. Given this, the political party advocating for the tax argue that the tax acts as a non-distortionary, lump-sum tax, and as such imposes no excess burden. Is this a reasonable argument?

Consider a government that imposes a personal income tax. It is estimated that the tax will...

A tax on hamburgers Suppose a state government imposes a tax on sales of hamburgers. Before...

A tax on hamburgers Suppose a state government imposes a tax on sales of hamburgers. Before the tax, 16 million hamburgers were sold at $3.25 per hamburger. With the tax in effect, 14 million hamburgers are sold, buyers pay $3.75 per hamburger, and sellers receive $3.00 per hamburger. In the scenario above, what is the tax ($ per hamburger)? In the scenario above, what is the tax incidence that falls on the sellers of hamburgers? ($ per six pack)?

1) Consider the market for milk and suppose the government taxes milk at $0.50 a gallon....

1) Consider the market for milk and suppose the government taxes milk at $0.50 a gallon. a) Draw a demand and supply diagram and label the following points: A – the equilibrium without the tax X – the price that consumers pay along with the quantity of milk under the tax Z – the price that the sellers receive along with the quantity of milk under the tax Suppose the tax decreases to $0.25 b) Explain what happens to the...

Pretend walnuts have perfectly inelastic demand and the government imposes a 50 cent per package tax....

Pretend walnuts have perfectly inelastic demand and the government imposes a 50 cent per package tax. Who pays the tax? walnut producers pay all of it walnut producers and consumers will each pay part of the tax it depends on whether the government put the tax on producers or consumers walnut consumers pay all of it

There are two types of taxes: Federal tax and province tax. 1.Federal taxes: Assume that the...

There are two types of taxes: Federal tax and province tax. 1.Federal taxes: Assume that the share of income $35,000 and below is federally taxed at 15%, the share of income between $35,000 and $100,000 is taxed at 25%, and the share of income over $100,000 is taxed at 35%. (i.e an income over$ 100,000 is taxed as follows: -The portion of income up to and including the first $35,000 is federally taxed at 15%. -The portion of income between...

Suppose a state government imposes a tax on sales of hamburgers. Before the tax, 16 million...

Suppose a state government imposes a tax on sales of hamburgers. Before the tax, 16 million hamburgers were sold at $3.25 per hamburger. With the tax in effect, 14 million hamburgers are sold, buyers pay $3.75 per hamburger, and sellers receive $3.00 per hamburger a) In the scenario above, what is the tax ($ per hamburger)? b) In the scenario above, what is the tax incidence that falls on the sellers of hamburgers? ($ per six pack)?

Suppose a state government imposes a tax on sales of hamburgers. Before the tax, 16 million...

Suppose a state government imposes a tax on sales of hamburgers. Before the tax, 16 million hamburgers were sold at $3.25 per hamburger. With the tax in effect, 14 million hamburgers are sold, buyers pay $3.75 per hamburger, and sellers receive $3.00 per hamburger. In the scenario above, what is the tax ($ per hamburger)?

Select any one of the 50 states and research if that state imposes an inheritance tax....

Select any one of the 50 states and research if that state imposes an inheritance tax. Who is the inheritance tax imposed against? Does the state offer any exemptions? I would like to choose Kansas or Minnesota as my state (300 detailed words needed)..

Subjects