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.

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Definitions:

Selling Expenses

Costs associated with the marketing and distribution of a product, including advertising, sales staff salaries, and shipping costs.

Perpetual Inventory

An inventory management system that continuously tracks the quantity and value of inventory, updating records in real-time as transactions occur.

Credit Terms

The conditions under which credit is extended by a lender to a borrower, including repayment time frame and interest rate.

Credit Terms

The conditions under which a seller extends credit to a buyer, including the repayment period and any discount for early payment.