Question

5. Categorize each of the following funding schemes as examples of the benefits principle or the ability-to-pay principle. a. Visitors to many national parks pay an entrance fee. b. Local property taxes support elementary and secondary schools. c. An airport trust fund collects a tax on each plane ticket sold and uses the money to improve airports and the air traffic control system

Answer 1

Answer:

b, c and a

Explanation:

Ability to pay principle refers to an economic principle that states that the amount of tax an individual pays should be dependent on the level of burden the tax will create relative to the wealth of the individual.

Based on the above definition, the first category will be:

1. Local property taxes support elementary and secondary schools. This tax will definitely generate the biggest tax burden of the 3 cases in the scenario.

2. An airport trust fund collects a tax on each plane ticket sold and uses the money to improve airports and the air traffic control system. Obviously this tax will be of a higher burden than paying national park entrance fees but will not be as heavy as local property taxes

3. Visitors to many national parks pay an entrance fee. Park entrance fees will be of the lightest burden of the three cases in the scenario.