Asked by Colin dunkley on May 09, 2024
Verified
Refer to Table 12-6. In this economy Tax C exhibits
A) horizontal and vertical equity.
B) horizontal equity but not vertical equity.
C) vertical equity but not horizontal equity.
D) neither horizontal nor vertical equity.
Horizontal Equity
The principle that individuals with similar income or assets should pay the same amount in taxes.
Vertical Equity
A principle in taxation where taxpayers with a greater ability to pay, pay more in taxes, demonstrating a progressive tax system.
Small Economy
An economy that is limited in size, characterized by a smaller population, lower GDP, and less impact on international markets compared to larger economies.
- Discern the ideas of horizontal and vertical justice in tax policies.
Verified Answer
LL
Lauren lemkeMay 13, 2024
Final Answer :
C
Explanation :
Tax C is progressive, meaning people with higher incomes pay a higher percentage of their income in taxes, which aligns with the principle of vertical equity. However, it does not treat people at the same income level equally, thus lacking horizontal equity.
Learning Objectives
- Discern the ideas of horizontal and vertical justice in tax policies.