Tax policy plays two important roles in financing economic development. One is to maintain an economy at a higher employment level so that the saving capacity of the people is raised with an increase in income per head. The second is to raise the marginal propensity to save of the community as far above the average propensity to the maximum [...]
In this article we will discuss about the role of the government in a market economy. The classical economists like Adam Smith, J.S. Say and other advocated the doctrine of laissez faire which means non- intervention of the government in economic matters. Adam Smith introduced the concept of the invisible hand, which refers to the free functioning of the price [...]
The following points highlight the top five factors determining the scope of taxable capacity. The factors are: 1. Income 2. The rate of taxes 3. The way the resources are used 4. The attitude of the people 5. Special circumstances. Factor # 1. Income: The level of income is no doubt the primary determinant of taxable capacity. But its nature [...]