The benefits-received principle of taxation is most evident in the government’s collection of tolls and other fees based on how much an individual or business benefits from public goods and services. These include highway tolls, bridge tolls, park tickets, and train fares.
The primary goal of a national tax system is to generate revenues that grow in proportion to the expenditures of government at all levels. Income, sales, and value-added taxes generally meet this criterion; property taxes and taxes on nonessential articles of mass consumption (such as tobacco products) do not.
A second principle is that a tax should not discriminate between people in terms of their ability to pay. For example, capital income, which enables future consumption, should not be taxed more than ordinary earnings because it will discourage consumption today.
Wealth, the total of assets less liabilities, is also often used as a measure of ability to pay. However, this can be difficult to apply because some people possess productive wealth, such as an apartment complex that generates income.
Some argue that the use of wealth as a measure of ability to pay is flawed because it ignores other factors, such as work effort and dependency on others. It also fails to reflect the fact that not all jobs require the same level of effort and that some people have significant amounts of debt or obligations.
In addition, it may be difficult to determine who pays a tax, which could affect the incidence of that tax. For instance, someone earning a low wage might be forced to pay significantly more in taxes to support a public transit system than a wealthy person would be. This change could negatively impact their buying power and limit their ability to save for the future and move up in the economic ladder.