If two families are equally situated except that one rents and the other owns their home, the existing tax system will lead to
A)vertical inequity.
B)equal treatment of both.
C)horizontal inequity.
D)equal burden sharing.

Question

Quizplus · Accepted Answer

The existing tax system will lead to horizontal inequity in this scenario because the family that owns their home will be able to deduct their mortgage interest and property taxes from their taxable income, reducing their tax burden compared to the family that rents. This results in unequal treatment despite the two families being equally situated in every other way.

If Two Families Are Equally Situated Except That One Rents