Question

What does the principle of horizontal equity state? Taxpayers with a greater ability to pay taxes should pay larger amounts. People should pay taxes based on the benefits they receive from government services. Taxpayers with a similar ability to pay taxes should pay the same amount. Taxpayers with a lesser ability to pay taxes should pay larger amounts.

Answer 1

The correct answer is letter "C": Taxpayers with a similar ability to pay taxes should pay the same amount.

Step-by-step explanation:

Horizontal equity is considered the fairest taxation system because it proposes that individuals with a relatively similar income should pay the same amount of taxes. Therefore, those people will be subject to the same deductions and tax credits. This approach opposes the vertical equity theory that states individuals who perceive more income should pay more taxes.