Public Finance-Theories of Taxation (IEcoS (Economic Services) Economics Paper-3): Questions 1 - 9 of 12

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Question number: 1

» Public Finance » Theories of Taxation » Incidence of Taxation

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Appeared in Year: 2017

Essay Question▾

Describe in Detail

Distinguish between ‘ability to pay’ and ‘benefit principles’ of taxation. (200w, 15 Marks)

Explanation

  1. Benefits principle of taxation is given by Bowen and Erik Lindahl. And the ability to pay principle of taxation was provided by A. C. Pigou.
  2. The benefits principle takes a market oriented approach to taxation and explains the relationship between the taxpayer and government in quid pro quo terms. However, in ability to pay principle taxes are se

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Question number: 2

» Public Finance » Theories of Taxation » Optimal Taxes and Tax Reforms

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Appeared in Year: 2010

Essay Question▾

Describe in Detail

Write a short note on optimal taxation.

Explanation

Optimal taxation depends upon the trade off between efficiency and fairness.

  • A fair tax is one that guarantees a socially desirable distribution of tax burden; an efficient tax is one with a small excess burden.

  • A fair tax is often the one that imposes equal liabilities on people that have the same ability to pay, whereas an efficient tax

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Question number: 3

» Public Finance » Theories of Taxation » Incidence of Taxation

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Appeared in Year: 2011

Essay Question▾

Describe in Detail

What are the requirements for a good tax structure? Discuss how far the Benefit Tax principle fits with these criteria.

Explanation

  • The requirements of a good tax structure as follows:

    • Revenue yield should be adequate.

    • The distribution of the tax burden should be equitable. Everyone should be made up to pay his or her fair share.

    • What matters in this context is not only the impact point at which the tax is imposed but its final resting place. The problem of inci

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Question number: 4

» Public Finance » Theories of Taxation » Optimal Taxes and Tax Reforms

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Appeared in Year: 2011

Essay Question▾

Describe in Detail

Explain the growth theory of a firm given by Robin Morris.

Explanation

  • According to Robin Morris, managers strive to maximize the balanced growth rate of an organization subject to managerial and financial constraints. Morris translates the two growth rates in to two utility functions, which are as follows:

    • Manager’s utility functions (salary, power, job security, prestige and status)

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Question number: 5

» Public Finance » Theories of Taxation » Optimal Taxes and Tax Reforms

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Appeared in Year: 2011

Essay Question▾

Describe in Detail

Write a short note on Laffer curve.

Explanation

Laffer curve is an illustration of the thesis that there exists some optimal tax rate which maximizes government tax revenues.

  • The thesis may be expressed in terms of personal or corporate taxes and it proposes that taxes above the optimal rate discourage production and hence result in lower revenues.

  • In other words, if higher income taxe

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Question number: 6

» Public Finance » Theories of Taxation » Incidence of Taxation

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Appeared in Year: 2010

Essay Question▾

Describe in Detail

What do you mean by tax incidence? Analyze how is it determined under the modern theory of incidence of taxation?

Explanation

  • Tax incidence is defined as its final resting place. It is to be seen and judged in terms of the money burden.

    • Thus, the incidence of a tax is upon that economic unit which finally bear the money burden of it and which are not able to pass it on to others.

    • The modern economists like Dalton were of the view that the shifting of taxation

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Question number: 7

» Public Finance » Theories of Taxation » Optimal Taxes and Tax Reforms

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Appeared in Year: 2010

Essay Question▾

Describe in Detail

Explain the concept of equity in taxation. Analyze how ability to pay theory is useful in achieving it.

Explanation

  • The concept of equity in taxation refers to the social justice in the allocation of tax burden.

    • Equity is identified with other general criteria such as fairness, justice or avoidance of hardship, and linked with particular phenomenon such as distribution of income or property.

    • There are two criteria of equity:

      • Horizontal equity imp

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Question number: 8

» Public Finance » Theories of Taxation » Optimal Taxes and Tax Reforms

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Appeared in Year: 2010

Essay Question▾

Describe in Detail

What do you mean by tax incidence? Analyze how is it determined under the modern theory of incidence of taxation?

Explanation

Tax incidence is defined as its final resting place. It is to be seen and judged in terms of the money burden. Thus, the incidence of a tax is upon that economic unit which finally bear the money burden of it and which are not able to pass it on to others.

  • The modern economists like Dalton were of the view that the shifting of taxation is bas

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Question number: 9

» Public Finance » Theories of Taxation » Optimal Taxes and Tax Reforms

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Appeared in Year: 2018

Essay Question▾

Describe in Detail

In the case of Corporate Tax, who bears the incidence? Substantiate your answer in the light of Herberger Model. (2012)

Explanation

Corporation tax is considered to be the most controversial issue in tax incidence analysis.

  • According to the traditional view, shifting of corporation tax is not possible but modern economists do not agree with this view.

  • In the opinion of the traditional thinkers on this subject matter, the burden rests with the stockholders through redu

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