This Constitution establishes the principles and values of the NHS in England. The NHS is founded on a common set of principles and values that bind together the communities and people it serves – patients and public – and the staff who work for it. It touches our lives at times of basic human need, when care and compassion are what matter most. It works at the limits of science – bringing the highest levels of human knowledge and skill to save lives and improve health. Considering the fact that this product is price inelastic, imagine it also being a necessity.It is there to improve our health and wellbeing, supporting us to keep mentally and physically well, to get better when we are ill and, when we cannot fully recover, to stay as well as we can to the end of our lives. The government intended to tax the producer, but consumers ended up paying more because the producers simply passed on the tax to the consumer in form of higher prices. However, as the demand for this product is price inelastic, consumers end up paying more of the tax burden than producer does! How is this possible? This is an unintended consequence of this tax policy. An example of a possible effect of such a tax is shown in Figure 1 below.įigure 1 above shows a tax on a producer which shifts the supply curve from S 0 to S tax by the amount of tax. Consider an example of a sales tax levied on producers. 2Īn important factor to consider when designing an equitable tax system is the incidence of tax. Another concern for a wealth tax is that it taxes assets irrespective of their returns, which can make the tax regressive in practice if people holding less liquid assets, which do not generate too much income, are taxed. This meant that the middle class had been taxed, which made the taxes politically unpopular. In addition, in some countries, the wealth taxes started from a relatively low threshold. The difficulty in enforcing that all assets are declared and taxed properly can mean that a wealth tax is less effective than it is hoped to be. In particular, France replaced its net wealth tax with a tax on real estate in 2018 Italy taxes financial assets and real estate held abroad Belgium taxes securities accounts worldwide. In addition to these three, France, Italy, and Belgium have wealth taxes on selected assets. 2 As of 2022, only Norway, Switzerland, and Spain have a net wealth tax. Over the years, this number has dropped to only 3. In 1990, there were 12 OECD countries with a net wealth tax. Wealth taxes were once more popular than they are today. In reality, the tax systems usually take some of these factors into account and treat some of these expenses as "deductibles" - the amount that can be deducted from the amount of taxable income. But what if the second person actually has to pay off student debt from college? Now, it is getting harder to say who has a better ability to pay taxes the more factors we consider. What do we mean when we say that two taxpayers are similar? Sure, they may have the same monthly income, but does that necessarily mean that their ability to pay taxes is also the same? No, because other factors also matter to the ability to pay taxes.įor example, what if one of them has to raise two children, and the other one doesn't have children? Then, with the same income, the second person can afford to pay more in taxes because he/she doesn't have to spend money on raising two kids. But in reality, the details are trickier. It sounds simple, doesn't it? If two taxpayers are similar, their tax payments should also be similar. Horizontal equity is the idea that people with a similar ability to pay taxes should pay a similar amount of taxes.
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