Final answer:
Two principles of tax fairness include the benefit principle of taxation, which suggests that taxes should correlate with the benefits received from public services, and the ability-to-pay principle, where taxes are based on an individual's or entity's financial capacity. Taxation should strive to be equitable, simple, and efficient.
Step-by-step explanation:
Principles of Tax Fairness
The question of tax fairness centers on two primary principles that determine how taxes should be distributed among individuals and entities. The first is the benefit principle of taxation, which posits that those who derive the most benefit from public services and infrastructure should pay taxes in a manner that correlates to the extent of benefits they receive. However, this principle can be challenging to implement due to the difficulty in quantifying benefits and the fact that those most in need of government services may be least able to afford additional taxes.
The second principle is the ability-to-pay principle, whereby taxation is based on an individual's or entity's capacity to pay. This principle supports a progressive taxation structure where individuals with greater financial resources pay a higher percentage of taxes, reflecting the belief that tax burdens should be scaled according to one's economic standing.
Taxation, in its essence, should strive to meet the standards of being equitable, simple, and efficient to maintain its efficacy and public acceptance. Notably, the concept of fairness in taxation also involves minimizing loopholes and exemptions to ensure a more equal distribution of the tax burden.