Horizontal and vertical equity are the two primary measures of efficiency of a tax system.

Question

Quizplus · Accepted Answer

Horizontal and vertical equity are measures of fairness, not efficiency, in a tax system. Horizontal equity means people with similar abilities to pay taxes should pay the same amount, while vertical equity means those with greater ability to pay should pay more. Efficiency in a tax system typically refers to how well the tax system raises revenue without causing economic distortions.

Horizontal and Vertical Equity Are the Two Primary Measures of Efficiency