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The Whys of Taxes

Theme 3: Fairness in TaxesLesson 1: How to Measure Fairness

 

Illustration of balanced scales
Two criteria used to measure fairness in taxes are benefits received and ability to pay. Benefits received means that people should pay taxes in proportion to the benefits they receive from government goods and services. Ability to pay means that people's taxes should be in proportion to their resources. People's resources differ because they have different amounts of
  • wealth (assets and property such as houses, cars, stocks, bonds, and savings accounts), or
  • income (wages, interest and dividends, profits, or other payments).

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Assessment
quick check
What two criteria can be used to assess whether a tax is fair?


tax trivia
Did You Know?
The IRS, a branch of the Department of Treasury, deals directly with more Americans than any other institution, public or private. It also is one of the world's most efficient tax agencies. In 2007, the IRS collected more than $2.5 trillion in revenue and processed over 235 million tax returns. Over 87 million tax returns were filed electronically. It also had the lowest cost/collection ratio since 1954.

Test your tax trivia knowledge by answering the following multiple-choice question. Click on the correct answer. To assess your answer, click the Check My Answers button.
How much do you think it costs taxpayers for each $100 collected by the IRS?
  • A.
  • B.
  • C.
  • D.


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