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Taxation is the ordinary means by which a government raises money to defray its legitimate operating expenditures. Taxes in a democratic state must only be levied with the consent of the governed. Consent to taxation is the primary means by which citizens hold government officials accountable to the public. The four principles of just taxation are as follows:
- Efficiency—A tax system should raise enough revenue so that government projects can be adequately funded, without burdening the taxpayer too much, becoming a disincentive for investment and work.
- Understandability—The system should not be incomprehensible to ordinary citizens, nor should it appear unjust or unnecessarily complex.
- Equitability—Taxation should be governed by people's ability to pay. Wealthier individuals or businesses with greater incomes should pay more. Those with lower incomes should pay ...