Horizontal Equity I.means That Those Taxpayers Who Have the Greatest Ability to Ability

question 79

Multiple Choice

Horizontal equity
I.means that those taxpayers who have the greatest ability to pay the tax should pay the greatest proportion of the tax.
II.means that two similarly situated taxpayers are taxed the same.
III.is reflected in the progressive nature of the federal income tax system.
IV.exists when Avis, a single individual with 4 dependent children, and Art, a single individual with no dependents, both pay $2,400 income tax on equal $26,000 annual salaries.

• A)Statements III and IV are correct.
• B)Statements II and III are correct.
• C)Statements I and III are correct.
• D)Only statement IV is correct.
• E)Statements I, II, III, and IV are correct.

---

Definitions:

Herfindahl Index

A gauge for determining the scale of businesses in comparison to the entire sector, illustrating the degree of competitiveness.

Market Share

The portion of a market controlled by a particular company or product, often expressed as a percentage of total sales in that market.

Foreign Competition

The presence and impact of producers from other countries competing in a domestic market.

Anticompetitive Monopolist

A single seller in a market who uses their dominant position to prevent or reduce competition through unfair practices.