According to John Stuart Mill, the four principles of taxation are that the system be efficient, understandable and equitable and those who benefit from publicly-provided services should sponsor and pay for those services through taxes. A good tax system follows the four principles of taxation.Know More
The first principle, efficiency, means that the tax system raises enough revenue to sponsor projects without burdening the economy and the system shall not become a disincentive for performance. According to Wikibooks, the second principle of "understandable" means that the system should not be incomprehensible to someone who does not understand the principles of taxation. The tax system should not have hidden or complicated language that the average citizen cannot understand, and all costs should be upfront and transparent.
Thirdly, the tax system must be equitable, notes Wikibooks. This means that taxation should be determined by a person's ability to pay, and that wealthier people should pay more in taxes because they are able to do so. This specific principle is also known as a flat tax rate. For example, a tax of 10 percent would have far less of an impact on a person who makes a million dollars a year than on someone who makes $10,000. The fourth principle, the benefit principle, simply means that those who benefit from a publicly provided service should pay the taxes that fund the service.Learn more about Taxes
Taxes are necessary to bring in revenue for local and state government services, according to the Internal Revenue Service. Taxes are designed to put money into programs that benefit the citizens.Full Answer >
In the United States, taxes can be levied by federal, state and local governments. The Internal Revenue System is the federal agency that taxes all income annually.Full Answer >
According to the 2014 Internal Revenue Service tax rates, the total tax on a personal income of $1,000,000 would come to $353,045.75. This does not include any adjustments for deductions, head of household or marriage status benefits.Full Answer >
The IRS indicates that taxes are vital to support the infrastructure that citizens rely on at the local, state and federal levels. Taxes support national defense programs, roadway construction, social service programs, public health and education. Without taxpayer support, many of these programs cannot exist.Full Answer >