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Summary Theory of Maximum Social Advantage-Slides
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The Principle of Maximum Social AdvantageIntroduced: British economist Hugh Dalton.
The Principle states:
The state should collect revenue and spend the money
so as to maximize the welfare of the people. When the
state imposes taxes, some disutility is created. On the
other hand, when the state spends some money, there is
gain in utility. The state should so adjust revenue and
expenditure that surplus of utility is maximised and
disutility is minimised.
1
Department of Economics and Foundation Course, R.A.P.C.C.E.
, Marginal Social Sacrifice (MSS)
Definition:
The amount of social sacrifice undergone by public due
to the imposition of an additional unit of tax. Every unit
of tax imposed by the government taxes result in loss of
utility.
Dalton: The additional burden (marginal sacrifice)
resulting from additional units of taxation goes on
increasing. Every additional unit of taxation creates
greater amount of sacrifice on the society.
2
Department of Economics and Foundation Course, R.A.P.C.C.E
, Marginal Social Sacrifice (MSS)
3
Department of Economics and Foundation Course, R.A.P.C.C.E
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