Final answer:
A good tax system is evaluated based on criteria such as equity, ensuring fairness; efficiency, effectively raising revenue without high costs or market distortions; simplicity, being straightforward and easy to comply with; and transparency, being clear and understandable to taxpayers.
Step-by-step explanation:
The criteria often used to evaluate a good tax system include equity, efficiency, simplicity, and transparency. These criteria ensure that the tax system is fair to all taxpayers, not overly complex, clear and understandable, and effective at raising the necessary revenue without excessive administrative costs or economic distortion.
Equity involves fair treatment of taxpayers, which may entail progressive taxation so that higher income individuals pay a higher rate, aligning with the ability to pay principle. Efficiency means the tax system should raise the needed funds without causing excess market distortions or having high compliance and administrative costs. Simplicity suggests that the tax code should be easy to understand and comply with, reducing the time and resources required to file taxes. Lastly, transparency is key for public trust, where taxpayers understand how tax rates are determined and how funds are used.