Final answer:
The necessary expense doctrine requires that an expenditure meets a three-part test involving legitimate public purpose, reasonable expectation of success, and proportionality of costs to benefits. This doctrine is related to the principles underpinning effective taxes which must be equitable, simple, and efficient.
Step-by-step explanation:
The necessary expense doctrine is a legal principle used to determine whether an expenditure by a government entity can be considered justifiable.
To apply this doctrine, an expenditure must typically pass a three-part test. The test often requires that the expenditure must serve a legitimate public purpose, the expectation of achieving a desired outcome must be reasonable, and the expense should not be excessive or disproportionate to the anticipated public benefit.
Effective taxes also contribute significantly to law and economics. They must meet the three criteria of being equitable, simple, and efficient, which ensures that taxes are fair to all, easy to understand and comply with, and successful at generating the necessary revenue without undue burden.