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A narrower view of the theory of taxation reduces the system to two issues: who can pay and who can benefit (Benefit principle). Influential theories have been the ability theory presented by Arthur Cecil Pigou [2] and the benefit theory developed by Erik Lindahl. [3][4] There is a later version of the benefit theory known as the "voluntary ...
The benefit principle is a concept in the theory of taxation from public finance. It bases taxes to pay for public-goods expenditures on a politically-revealed willingness to pay for benefits received. The principle is sometimes likened to the function of prices in allocating private goods. [1] In its use for assessing the efficiency of taxes ...
Taxation. Optimal tax theory or the theory of optimal taxation is the study of designing and implementing a tax that maximises a social welfare function subject to economic constraints. [1] The social welfare function used is typically a function of individuals' utilities, most commonly some form of utilitarian function, so the tax system is ...
Publication place. England. On the Principles of Political Economy and Taxation (19 April 1817) is a book by David Ricardo on economics. [1] The book concludes that land rent grows as population increases. It also presents the theory of comparative advantage, the theory that free trade between two or more countries can be mutually beneficial ...
The Modigliani–Miller theorem (of Franco Modigliani, Merton Miller) is an influential element of economic theory; it forms the basis for modern thinking on capital structure. [1] The basic theorem states that in the absence of taxes, bankruptcy costs, agency costs, and asymmetric information, and in an efficient market, the enterprise value ...
e. A Lindahl tax is a form of taxation conceived by Erik Lindahl in which individuals pay for public goods according to their marginal benefits. In other words, they pay according to the amount of satisfaction or utility they derive from the consumption of an additional unit of the public good. Lindahl taxation is designed to maximize ...
e. Optimal capital income taxation is a subarea of optimal tax theory which studies the design of taxes on capital income such that a given economic criterion like utility is optimized. [1] Some have theorized that the optimal capital income tax is zero. Starting from the conceptualization of capital income as future consumption, the taxation ...
Haig–Simons income or Schanz–Haig–Simons income is an income measure used by public finance economists to analyze economic well-being which defines income as consumption plus change in net worth. [1][2] It is represented by the mathematical formula: where C = consumption and Δ NW = change in net worth. Consumption refers to the money ...