Taxing people according to their marginal valuations of a public good may be efficient, but it may not be fair if the ability to pay differs.

Question

Quizplus · Accepted Answer

Taxing people based solely on their marginal valuations of a public good may result in unequal burden as those with lower ability to pay may still have a higher marginal valuation due to the importance of the good to them. Therefore, considering ability to pay is necessary for fairness.

Taxing People According to Their Marginal Valuations of a Public