Question

Which one of the following situations demonstrates the “equity” characteristic of a good tax?

Policy-makers introduce new forms to improve readability of paperwork for consumers.

Policy-makers reform the tax system to allow more taxpayers to prepare their own forms.

Policy-makers lower the tax rate for individuals earning income below the poverty threshold.

Policy-makers revamp tax collection procedures to save costs.

Answer 1

Policy-makers lower the tax rate for individuals earning income below the poverty threshold.

Step-by-step explanation:

Answer 2

The situation that would most likely demonstrate the “equity” characteristic of a good tax would be "Policy-makers lower the tax rate for individuals earning income below the poverty threshold." By definition, equity is the difference between assets and liabilities that is an important aspect of taxation.