Two Families Who Live in Plains, GA Have Identical Incomes

question 139

Multiple Choice

Two families who live in Plains, GA have identical incomes. The Smiths deduct $5,000 from their taxable income for mortgage interest paid during the year. The Jones family lives in an apartment and is not eligible for a mortgage-interest deduction. This situation exemplifies

• A)an application of the benefits principle of taxation.
• B)a violation of horizontal equity.
• C)a violation of vertical equity.
• D)an application of egalitarian tax rules.

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Definitions:

Daily Travel

Refers to the routine trips individuals make on a regular basis, such as commuting to work or school and errands.

Practical Choice

A decision made based on efficiency, effectiveness, and pragmatism rather than emotional or aesthetic considerations.

Approach-Approach

A psychological conflict that occurs when a person has to choose between two desirable options.

Hedonic-Utilitarian

This refers to the dichotomy in consumer preferences and buying behavior, where hedonic pertains to seeking pleasure, and utilitarian involves practical or functional aspects.