The Tax Reform Act of 1986 eliminated the
deductibility of interest payments on consumer
debt (mostly credit cards and auto loans)
but maintained the deductibility of interest
payments on mortgages and home equity loans.
What do you think happened to the relative
amounts of borrowing through consumer debt
and home equity debt?
Q288;
Categorize each of the following funding
schemes as examples of the benefits principle or
the ability-to-pay principle.
a. Visitors to many national parks pay an
entrance fee.
b. Local property taxes support elementary and
secondary schools.
c. An airport trust fund collects a tax on each
plane ticket sold and uses the money to
improve airports and the air traffic control
system.