Q. 75.0( 2 Votes )
Tax on income or tax on commodities. Which of the two affects the rich more and which affects the poor more? Explain with reasons.
Tax on income affects the rich more. Income tax is levied on people who have income above a particular threshold. They will be more affected by income tax as higher income results in the levy and collection of higher taxes from them. The consumption of these sections remains relatively unresponsive to changes in income. Thus they are not affected by the tax on commodities. Rather, a higher rate of income taxes can have an effect on them.
Tax on commodities affected the poorer sections of society. If the commodities they consume are taxed more, they would be compelled to pay a higher price for the commodities and services. This affects their cost of living and standard of living. Thus the poorer sections are affected by commodity taxes more than income taxes.
Rate this question :
What is the effect of black money on our economy?Telangana Board - Social Science
Ordinary food items, such as grain, pulses, oil are used by all. Then why is it said that imposing a tax on them will have a greater effect on the poor?Telangana Board - Social Science
What is the difference between the Excise duty and Customs duty?Telangana Board - Social Science
Match the following:
Is there any hike in the bus fares recently? If so, try to know the reasons for it.Telangana Board - Social Science
How would VAT reduce the evasion of taxes on goods?Telangana Board - Social Science
You are expected to tax on steel, matches, clocks, cloth, iron; a tax increase on which of these would affect the prices of other commodities the most, and why?Telangana Board - Social Science
Why does the government need a budget? Why does the budget talks of taxes?Telangana Board - Social Science
Read the paragraph under the heading ‘Direct Taxes' and answer the following: Why do high-income earners pay more tax?Telangana Board - Social Science