Question

Which of the following statements is correct? a. Vertical equity is the idea that taxpayers with similar abilities to pay taxes should pay the same amount. b. Horizontal equity is the idea that taxes should be levied on a person according to how well that person can shoulder the burden. c. A regressive tax would mean that high-income tax payers pay a larger fraction of their income in taxes than would low-income taxpayers. d. A proportional tax would mean that high-income and low-income taxpayers pay the same fraction of income in taxes

Answer 1

Answer: Option (D)

Explanation:

Vertical equity  is referred to as or known as the notion that the taxpayers that have the greater ability to pay the taxes should pay the larger amounts.

Whereas on the other hand the horizontal equity  refers to the idea under which the taxpayers that have the similar abilities in accordance with paying taxes should pay same.

Regressive tax  is known as or described as the tax under which the high-income earner pay the smaller fraction of income as tax than the other low income earners.