Which of the following would not be a failure of the horizontal equity concept?
A)Two taxpayers with identical income pay different amounts of tax because one taxpayer's income includes tax-exempt interest.
B)Two taxpayers pay different property tax amounts on similar plots of land (i.e., same value)because one plot of land is used to raise crops.
C)Two taxpayers pay different amounts of estate tax because one taxpayer's estate is worth significantly more.
D)All of the choices are correct.
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

Horizontal equity in taxation means that taxpayers in similar financial situations should be taxed similarly. Choice C describes a situation where taxpayers are not in similar financial situations (one estate is worth significantly more), which does not violate the principle of horizontal equity. Choices A and B describe situations where taxpayers in similar situations are taxed differently, which would be a failure of horizontal equity.

Which of the Following Would Not Be a Failure of the Horizontal