If Taxes Are Collected on the Basis of Ability-To-Pay and There

question 95

Multiple Choice

If taxes are collected on the basis of ability-to-pay and there are two taxpayers with the same income who also are identical in all other respects,which of the following is correct?

• A) Vertical equity is impossible between these two taxpayers.
• B) Vertical equity exists.
• C) Horizontal equity exists.
• D) The tax must be proportional.
• E) The fair-incidence principle is potentially being violated.

---

Definitions:

Arbitration Case

A legal dispute that is resolved outside of court by an arbitrator, whose decision is typically binding on both parties.

Turnover

The rate at which employees leave a business and are replaced by new employees, which can affect organizational performance and continuity.

Unionized Settings

Work environments where a labor union represents the interests of the employees in negotiations with the employer regarding wages, benefits, and working conditions.

Nonunionized Settings

Work environments where a labor union does not represent the employees, often leading to different management and negotiation processes.