Taxes can be justified if the government uses the revenue to (i)
Provide public goods such as national defense.(ii)
Clean up negative externalities such as water pollution.
(iii)
Regulate a common resource such as fish in a public lake.(iv)
Provide goods with positive externalities such as medical research.

Question

Quizplus · Accepted Answer

All of the options listed (i)-(iv) are justifiable reasons for implementing taxes. Providing public goods, cleaning up negative externalities, regulating common resources, and providing goods with positive externalities are all examples of government actions that benefit society as a whole and require funding from tax revenue.

Taxes Can Be Justified If the Government Uses the Revenue