Trying to achieve vertical equity by using a progressive income tax structure can create problems with which of the following?
A) horizontal equity
B) vertical equity
C) benefits received
D) tax incidence
E) regressive equality

Question

Quizplus · Accepted Answer

Vertical equity aims to make those who have higher incomes pay a higher percentage of their income in taxes, but this can create issues with horizontal equity, which calls for individuals with similar incomes to be taxed equally. In other words, if two individuals have the same income but one is taxed more heavily than the other because of their occupation or other factors, then there would be a violation of horizontal equity. Therefore, while striving for vertical equity in a progressive income tax structure, policymakers must also keep in mind the importance of horizontal equity to ensure that the tax system remains fair and just for all.

Trying to Achieve Vertical Equity by Using a Progressive Income