In what key area do the benefit principle of taxation and the ability-to-pay principle of taxation differ?
A. how taxes should be collected
B. which types of items should be taxed
C. who should pay the taxes
D. what percentage of income should be taxed
Is it C?
It is C.
Yes, you are correct. The key area in which the benefit principle of taxation and the ability-to-pay principle of taxation differ is by determining who should pay the taxes.
The benefit principle of taxation states that individuals should pay taxes in proportion to the benefits they receive from government services. In other words, those who benefit more from public goods and services should bear a larger tax burden. This principle suggests that taxpayers should contribute based on the value they receive from specific government-provided benefits.
On the other hand, the ability-to-pay principle of taxation suggests that individuals should contribute to taxes based on their ability to pay, regardless of the benefits they receive. This principle takes into account the notion that those with higher incomes or greater wealth have a greater ability to bear the burden of taxation.
Therefore, the correct answer is C - who should pay the taxes.