Making the Transition from the Current Income Tax System to a Flat

question 22

Multiple Choice

Making the transition from the current income tax system to a flat tax system would be likely to cause:

• A) vertical inequities during the transition as high-income individuals lose access to tax loopholes.
• B) horizontal inequities during the transition as tax preferences for homeownership and employer-provided health insurance are eliminated.
• C) reduced compliance because the current system is less complex.
• D) improvements in both horizontal and vertical equity.

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Definitions:

Fraudulent Misrepresentation

The act of deceiving another party through false statements or misrepresentations with the intent to gain unlawfully or induce the party into a contract.

Disparagement

The act of speaking about someone in a negative or belittling way, especially to damage their reputation.

Strictly Liable

Refers to a legal principle where a party is held responsible for damages or injuries regardless of fault or negligence.

Assumption Of Risk

A legal doctrine that holds that an individual can be barred from recovering damages for any harm suffered if they voluntarily exposed themselves to a known risk.