Given the Following Tax Structure,what Amount of Tax Would Need

Question

Examlex · Accepted Answer

The Answer is Horizontal equity means that two taxpayers in similar situations pay the same tax.Thus,to make the tax structure horizontally equitable,Carrie should pay $1,500 in tax.
Fantasia's average tax rate is 7.5%.

Horizontal equity means that two taxpayers in similar situations pay the same tax.Thus,to make the tax structure horizontally equitable,Carrie should pay $1,500 in tax. Fantasia's average tax rate is 7.5%. To be vertically equitable with respect to tax rates,Simon should pay a tax rate higher than 7.5%.A 7.5% tax rate on Simon's $30,000 taxable income would result in $2,250 of tax (i.e.,7.5% × $30,000 = $2,250).Thus,Simon must pay more than $2,250 tax for the tax structure to be vertically equitable (i.e.,to generate a tax rate more than 7.5%).This would result in a progressive tax rate structure.

To be vertically equitable with respect to tax rates,Simon should pay a tax rate higher than 7.5%.A 7.5% tax rate on Simon's $30,000 taxable income would result in $2,250 of tax (i.e.,7.5% × $30,000 = $2,250).Thus,Simon must pay more than $2,250 tax for the tax structure to be vertically equitable (i.e.,to generate a tax rate more than 7.5%).This would result in a progressive tax rate structure.

Given the Following Tax Structure,what Amount of Tax Would Need

Definitions: