Public Finance - Tax System Essay Example | Topics and Well Written Essays - 2000 words

Public pay - Tax System - Essay ExampleWhile a valuate is imposed it somehow hampers the thaw market operation and hence levy is subject to some social cost. Thats why an efficient taxation should minimize the social cost or welfare loss. On the other hand it should target to advertise the saving and investment in the society.According to Adam Smith, the tax structure should be fair and make enough i.e. everyone should realise the information regarding the tax that is paid and the administration of the tax system should be promiscuous and easy. While a tax is introduced the following facts should be kept into mind.1. The tax system should be economically efficient i.e. the benefit of taxation should exceed the social cost of it. The benefit includes the correcting effect, allocation of resources and insurance of equality.2. The tax system should possess administrative efficiency. It should be easy to monitor and maintain and the system should be childlike enough so that the administrative cost and the compliance cost are minimum.4. There should be decision coordination between the political decision makers and the tax system. It implies that tax payers should have the perfect knowledge about the rule of operation of the taxation system and the political decision makers should be well aware of the preference of the peck so that the change in decision must be the resemblance of the choice of the majority of the tax payers which is a basic feature of a democratic system.All the aforesaid features are closely think to a fair distribution and the economic benefit of the taxes. Beneficial tax normally refers to the optimum taxation. The optimal tax theory is based on the equality and the economy of collection of taxation. While any authorities frames a taxation policy it should keep into mind that the taxation should be socially justified and have minimum impacts on the economic decisions. A wide