Exempting food purchases from sales tax is consistent with the ability-to-pay principle, although not necessarily consistent with vertical equity.

Question

Quizplus · Accepted Answer

Exempting food from sales tax aligns with the ability-to-pay principle as it reduces the tax burden on lower-income individuals who spend a larger portion of their income on necessities like food. However, it may not fully achieve vertical equity, which requires higher-income individuals to pay a larger share of their income in taxes.

Exempting Food Purchases from Sales Tax Is Consistent with the Ability-To-Pay