Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 4 The Economics of the Public Sector
Chapter 12 of 36 The Design of the Tax System
Section 16 of 22
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Tax policy generates heated debates in American politics.
The heat is rarely created over questions of tax efficiency.
Rather, it arises from disagreements over tax burden distribution, over questions of equity.
(For details check “What are aspects of an efficient tax and an equitable tax?” at ChatGPT or other AI information service).
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The benefits principle of taxation holds people should pay taxes based on
the benefits they receive from government services.
This principle equates public goods to private goods.
It seems fair a person who often goes to the movies must pay more in total for movie tickets than a person who rarely goes.
Similarly a person who gets a large benefit from a public good should pay more for it than a person who gets little benefit.
Revenues from the gasoline tax are commonly used to build and maintain roads.
Those who buy gasoline are the same people who use the roads.
So the gasoline tax can be viewed as a fair way to pay for this government service.
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The benefits principle can also be used to argue wealthy citizens should pay higher taxes than poorer ones because the wealthy benefit more from public services.
Citizens with high property value to protect benefit more from police than do those who own less property value.
So, the wealthy should contribute more than the poor to the cost of maintaining the police force.
The same argument can be used for other public services including fire protection, national defense, and the court system.
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the court system
shihō seido
司法制度
(no equivalent word for / use of “the” in Japanese)
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