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Unformatted text preview: Fiscal federalism: higher governments give grants to lower level of government-Concept of Equity in Taxation o Horizontal equity: people with the same level of income should pay the same tax rate o Vertical equity: people with different levels of income should pay different tax rates Ability to pay o Benefits principal: if you get benefits you should pay taxes on those services-Efficiency o Burden of a tax: amount of money to give to somebody so he can be just as well off as without the tax...
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