Suppose a tax is implemented to fund low-income housing.Which principle of taxation is most appropriate as a guide to evaluating the tax?

Question

Quizplus · Accepted Answer

The ability-to-pay principle suggests that the tax burden should be proportional to an individual's ability to pay, which is likely to be more equitable in funding low-income housing. The benefit principle suggests that those who benefit the most from public goods or services should pay more, but this may not be suitable for low-income housing as it benefits low-income households in particular, who may not be able to pay more relative to their income. The mobility principle is not relevant to this question as it pertains to how taxes can affect economic behavior and decisions.

Suppose a Tax Is Implemented to Fund Low-Income Housing