1. The three criteria’s for an effectivetax system are equity, simplicity, and efficiency. Equity is that taxes shouldbe impartial and just. Simplicity is when tax laws should be written so thatboth taxpayers and tax collectors can understand them. Efficiency is when a taxshould be relatively easy to administer and reasonably successful at generatingrevenue.2.
The characteristicsof progressive Tax, proportional tax and regressive tax. Progressive tax is taxrate that changes depending on taxpayer’s income. Proportional tax is every taxpayerthat pays the same tax rate but not the same amount of tax. Regressive tax istaxpayers with lower income pay a higher tax rate than thosewith higher income.3.
The main points of the twoprinciples of taxation are benefit principle and ability to pay principle. Benefitprinciple is the theory of taxation from public finance. Ability to payprinciple is maintains that taxes should be levied according to a taxpayer’sability to pay. 4. Sin tax is a state tax that is added to products orservices, such as alcohol, tobacco and gambling. The significance is that thegovernment tries to discourage people from involving themselves in suchactivates.
5. National debt is the resulting federal government borrowingmoney to cover for many years of budget deficits. Federal deficit is spendingthe greater than the revenue received for that year.