This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Ability-to-pay Principle : the idea that taxes should be levied on a person according to how well that person can shoulder the burden Accounting Profit : total rev-total exp. cost ATC = AFC + AVC ATC = TC/Q AVC = VC/Q Average Tax Rate : total taxes paid/total income; measures the sacrifice a taxpayer makes Benefits Principle : the idea that people should pay taxes based on the benefits they receive from government services (gas taxes) Diminishing Marginal Product : the marginal product of an input declines as the qty of the input increases (other things equal) Economic Profit : total rev-total costs Equity : distributing the burden of taxes fairly Explicit Costs : require an outlay of money (paying workers wages) Fixed Costs : dont vary with the qty of output produced Flat Tax : a tax system under which the marginal tax rate is the same for all taxpayers Horizontal Equity : the idea that taxpayers with similar abilities to pay taxes should pay the same amount Implicit Costs : dont require a cash outlay (the opp. cost of the owners time): dont require a cash outlay (the opp....
View Full Document
This note was uploaded on 09/27/2011 for the course ECON 101 taught by Professor Gottlieb during the Spring '08 term at Rutgers.
- Spring '08