CLEP Microeconomics Exam Prep

Answer - B - The benefits-received principle maintains that the government should tax individuals in accordance with the benefits they receive-no matter what their income level.

Key Takeaway: The government uses two principles in order to allocate taxes: the benefits-received principle and the ability-to-pay principle. According to the benefits-received principle, individuals are taxed based upon the benefits they receive, not their income level. The ability-to-pay principle maintains that people are taxed according to their income, no matter what the benefits they may or may not receive from the government.