Vertical equity
I.means that those taxpayers who have the greatest ability to pay the tax should pay the greatest proportion of the tax.
II.means that two similarly situated taxpayers are taxed the same.
III.is reflected in the progressive nature of the federal income tax system.
IV.exists when Avis, a single individual with 4 dependent children, and Art, a single individual with no dependents, both pay $2,400 income tax on equal $26,000 annual salaries.

Question

Quizplus · Accepted Answer

Vertical equity means that those who are more capable of paying should pay a larger percentage of taxes. Therefore, statement I is correct. Statement III is also correct because the progressive nature of the federal income tax system ensures that higher-income taxpayers pay a higher percentage of their income in taxes. Statement II is incorrect since vertical equity does not necessarily mean that taxpayers in similar situations are taxed the same. Statement IV is incorrect because Avis and Art should not pay the same amount in income taxes if they have different numbers of dependents.

Vertical Equity I.means That Those Taxpayers Who Have the Greatest Ability to Ability