The ability-to-pay principle leads to two corollary notions of equity: vertical
equity and horizontal equity. Vertical equity states that taxpayers with a greater
ability to pay taxes should contribute a larger amount. Horizontal equity states
that taxpayers with similar abilities to pay should contribute the same amount. Although these notions of equity are widely accepted, applying them to evaluate a
tax system is rarely straightforward.
equity and horizontal equity. Vertical equity states that taxpayers with a greater
ability to pay taxes should contribute a larger amount. Horizontal equity states
that taxpayers with similar abilities to pay should contribute the same amount. Although these notions of equity are widely accepted, applying them to evaluate a
tax system is rarely straightforward.
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