Taxpayers who earn $100,000 in dividends should pay the same amount of tax as taxpay- ers who earn $100,000 in capital gains.This statement reflects which of the following qualitative characteristics of an effective tax system?

Question

Quizplus · Accepted Answer

This statement reflects the principle of horizontal equity, which means that taxpayers in similar situations should pay the same amount of tax. This is because both dividends and capital gains are forms of investment income and those earning the same amount of investment income should be subject to the same tax treatment, regardless of the specific source of the income.

Taxpayers Who Earn $100,000 in Dividends Should Pay the Same