After reading this article you will learn about the arguments in favour and against proportional taxation. Arguments in Favour of Proportional Taxation: Proportional taxation has been advocated by the classical economists as a protest against the injustice of the old system of exemptions and privileges. Adam Smith, stating that taxation should be adjusted to the abilities of the subjects, adds [...]
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 [...]