After reading this article you will learn about the merits and demerits of progressive taxation. Merits of Progressive Taxation: Progressive taxation has been universally accepted as the best system of taxation. It is based on the application of principle of diminishing marginal utility of income and ability to pay. As income increases, marginal utility of income diminishes. Also, the higher [...]
This article throws light upon the top four theories of tax shifting. The theories are: 1. Concentration Theory 2. The Diffusion Theory 3. Demand and Supply Theory of Incidence 4. Musgrave’s Approach. Tax Shifting # 1. Concentration Theory: This theory was advocated by the physiocratic school of thought in France during the middle of the 18th century. Physiocrats believed that [...]
This article throws light upon the twelve main factors determining the incidence and shifting of tax. The factors are: 1. Elasticity of Demand 2. Elasticity of Supply 3. Price acts an Engine of Shifting 4. Tax Area 5. Time Period 6. Coverage of Tax 7. Availability of Substitutes 8. Nature of Demand for Commodities 9. Business Conditions 10. Types of [...]