Answer to Question #64397 in Finance for Harry Mg

Question

Explain the benefit principle for selecting a method of taxation. Is the benefit principle more likely to be followed if a tax structure is regressive, proportional, or progressive? Create an example of an actual tax to illustrate your answer.

Answer 1

The benefit principle for selecting a method of taxation is taken to levy taxes on finance undertaken by the government. Those that use a publicly provided service (which is funding primarily through taxation) should pay for it. The benefit principle more likely to be followed if a tax structure is proportional.