Final answer:
Adam Smith's criteria for a "good" tax system are that it should be efficient, simple, and equitable. Efficient in generating sufficient revenue without undue costs, simple so taxpayers can easily understand it, and equitable with contributions proportionate to one's ability to pay.
Step-by-step explanation:
Adam Smith, a prominent economist, established certain criteria for what he deemed a "good" tax system. Smith advocated for taxes that are efficient, simple, and equitable. Here's a breakdown of these criteria:
- Efficient: A good tax should be collected in a manner that does not inhibit the productive efficiency of the economy. It should be easy to administer and capable of generating sufficient revenue without excessive costs.
- Simple: Smith believed taxes should be straightforward and easily understandable by taxpayers. Complexity can lead to misunderstanding and a lack of compliance.
- Equitable: The tax system should be fair, with individuals contributing to government finances in proportion to their abilities. This is often referred to as the ability-to-pay principle.
Considering these criteria can make people more accepting of the taxes they pay, as they would perceive the system as fair and just.