Answer to Question #88591 in Macroeconomics for santiago ronquillo

Question

every person who buys a ticket to an event at the Conseco Fieldhouse pays a tax applied to the purchase price of the ticket. the money raised from the tax is used to help pay for the Field house. this is an example of what principle of taxation?

Answer 1

The Benefit Principle:

The principle recognises that the purpose of taxation is to pay for government services. If taxes are imposed according to the benefit principle, people pay taxes in proportion to the benefits they receive from government spending.

Therefore, those who derive the maxi­mum benefits from government services such as roads, hospitals, public schools and colleges should pay the maximum tax. However, if the benefit principle of taxation is followed, the government will be required to esti­mate how much various individuals and groups benefit, and set taxes accordingly.

According to the benefit principle of taxation those who reap the benefits from government services should pay the taxes. The benefit principle holds that people should be taxed in proportion to the benefits they receive from goods and services provided by the government. This principle is based on the feeling that one should pay for what one gets.

http://www.economicsdiscussion.net/taxes/principles-of-taxation-economics/26212