Which of the following principles encourages a vertically equitable tax system?
A) Pay as you go.
B) Economy.
C) Income effects.
D) Ability to pay principle.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

The ability to pay principle states that those who have more ability to pay should contribute more to the taxes. This encourages a vertically equitable tax system where the burden of taxation falls more heavily on those with higher incomes, making the system fairer.

Which of the Following Principles Encourages a Vertically Equitable Tax