12. Which of the following tax systems is generally seen as the most equitable, based on the ability to pay principle? A. Regressive B. Proportional C. Progression D. All 13. What is the highest marginal income tax rate for employment income in Ethiopia? A. 25% B. 20% C. 35% D. 45% 14. Who is primarily associated with the formulation of the classic canons of taxation? A. John Maynard Keynes B. Adam Smith C. Karl Marx D. Milton Friedman
Answer (1)
To answer the question regarding the tax system that is generally seen as the most equitable based on the ability to pay principle, we should consider what each tax system entails:
A. Regressive Tax System: In this system, the tax rate decreases as the taxable amount increases. This means that lower-income individuals end up paying a larger percentage of their income compared to higher-income individuals, which is generally viewed as less equitable.
B. Proportional Tax System (Flat Tax): Here, everyone pays the same percentage of their income regardless of how much they earn. While it treats all taxpayers equally at a surface level, it does not adjust for the varying abilities of individuals to bear tax burdens.
C. Progressive Tax System: This system imposes a higher tax rate on those with higher incomes compared to those with lower incomes, aligning better with the ability to pay principle. It is commonly considered the most equitable as it takes into account people's varying ability to contribute to the tax system.
Chosen Option: C. Progressive Tax System
The highest marginal income tax rate for employment income in Ethiopia is another question. As of my last update in 2023, the highest marginal tax rate in Ethiopia is 35%. Ethiopia's tax system is progressive, meaning higher earners pay higher rates.
Chosen Option: C. 35%
The classic canons of taxation are widely associated with Adam Smith. These principles were put forth in his seminal work, 'The Wealth of Nations,' published in 1776. Smith outlined four main canons: equity, certainty, convenience, and efficiency. These canons have influenced modern tax systems and provide a foundational framework for evaluating tax policy.
Chosen Option: B. Adam Smith
