Vertical Equity States That Taxpayers with a Greater Ability to Pay

question 123

Multiple Choice

Vertical equity states that taxpayers with a greater ability to pay taxes should

• A)contribute a decreasing proportion of each increment in income to taxes.
• B)contribute a larger amount than those with a lesser ability to pay.
• C)be less subject to administrative burdens of a tax.
• D)be less subject to tax distortions that lead to deadweight losses.

---

Definitions:

Dividend Payout Ratio

A financial ratio that measures the percentage of a company's net income that is distributed to shareholders as dividends.

Dividends Per Share

The dividend amount that a company pays out to its shareholders for each share owned.

Trend Percentages

Several years of financial data expressed as a percentage of performance in a base year.

Base Year

A specific year against which economic or financial data is compared over time for the purpose of analysis.