McqMate
| Q. |
A tax is characterized by horizontal equity if its liability is - |
| A. | proportional to the income of tax payers |
| B. | similar for tax payers in similar circumstances |
| C. | proportional to the expenditure of tax payers |
| D. | the same for every tax payer |
| Answer» A. proportional to the income of tax payers | |
|
Explanation: The principle of equity includes both horizontal and vertical. Equity is determined by first assessing an individual's ability-to-pay. The idea of the ability-to-pay principle considers whether or not it is fair to tax someone higher just because that person has the ability and resources to pay. If it is decided that they should be required to pay more, the question of how much more arises. These questions can be analyzed through horizontal and vertical equity which are subsets of the ability-to-pay principle. Horizontal equity suggests it is fair for people of equal ability to pay the same amount in taxes. |
|
View all MCQs in
Economics (GK)No comments yet