Asked by
Tommie Trujillo
on Nov 05, 2024Verified
Individuals are allowed to deduct a percentage of their expenditures for health care from their taxable income if these expenditures are above a certain amount. This reduces the amount that must be paid in taxes. Allowing for these deductions would ________ vertical and horizontal equity of the federal income tax.
A) not change
B) worsen
C) improve
D) Any of the above answers could be correct.
Vertical Equity
A principle in taxation that proposes taxpayers with a greater ability to pay, such as higher income levels, should pay more in taxes than those with lesser ability to pay.
Horizontal Equity
The principle that individuals with the same income or resources should be treated equally by the tax system.
Tax Deductions
Expenses that can be subtracted from gross income to reduce the amount of income that is subject to income tax.
- Acquire knowledge of and become familiar with the ideas of horizontal and vertical equity in the context of taxation.
- Comprehend the influence of distinct taxation and deductions on monetary and economic earnings.
Verified Answer
AG
Learning Objectives
- Acquire knowledge of and become familiar with the ideas of horizontal and vertical equity in the context of taxation.
- Comprehend the influence of distinct taxation and deductions on monetary and economic earnings.