Vertical equity and horizontal equity are associated with
A)the benefits principle of taxation.
B)the ability-to-pay principle of taxation.
C)taxes that have no deadweight losses.
D)falling marginal tax rates.

Question

Quizplus · Accepted Answer

Vertical equity is the principle that individuals with a greater ability to pay taxes should pay more, while horizontal equity is the idea that individuals with similar abilities to pay taxes should pay the same amount. Together, they are associated with the ability-to-pay principle of taxation, making option B the correct answer. The benefits principle of taxation is not related to vertical or horizontal equity, and options A, C, and D are not correct.

Vertical Equity and Horizontal Equity Are Associated with