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CandleFocus Glossary Editor
Horizontal equity is a principle of taxation which seeks to ensure that all tax-payers earning the same income are subject to the same rate of taxation. It has become particularly important in the context of modern tax systems where an increasing number of deductions and exemptions currently operate to create disparities in the effective taxation of different groups of taxpayers.
Horizontal equity advocates argue that a person’s taxable income should be calculated in the same way regardless of their individual situation, and that a tax rate should be established which is the same for all taxpayers with the same level of income. This principle aims to ensure the fairness of a tax system by acknowledging that those who receive the same level of remuneration should be taxed equally for it.
Tax avoidance is a major problem for horizontal equity, and one of the primary reasons why this principle is so important. A person earning the same level of income as somebody else may be able to take advantage of deductions, tax credits, incentives, or loopholes to reduce their effective tax rate. This undermines horizontal equity, as those who cannot take advantage of deductible provisions pay a larger amount of tax than they should.
The idea of horizontal equity is that taxes should be imposed equitably, meaning that all people who are situated in the same way should be treated equally. This principle is based on the idea that those who possess the same resources and abilities face the same obligations and should not be given preferential tax treatment. As such, horizontal equity attempts to create more balance in the taxation of different income brackets and make the system fairer for all taxpayers.
From a philosophical point of view, many people have argued in favor of horizontal equity as it is a more neutral and just system of taxation, as compared to other more progressive, regressive, or flat system taxation models. In the end, the aim of horizontal equity is to provide all taxpayers with equal opportunities and fair treatment.
Horizontal equity advocates argue that a person’s taxable income should be calculated in the same way regardless of their individual situation, and that a tax rate should be established which is the same for all taxpayers with the same level of income. This principle aims to ensure the fairness of a tax system by acknowledging that those who receive the same level of remuneration should be taxed equally for it.
Tax avoidance is a major problem for horizontal equity, and one of the primary reasons why this principle is so important. A person earning the same level of income as somebody else may be able to take advantage of deductions, tax credits, incentives, or loopholes to reduce their effective tax rate. This undermines horizontal equity, as those who cannot take advantage of deductible provisions pay a larger amount of tax than they should.
The idea of horizontal equity is that taxes should be imposed equitably, meaning that all people who are situated in the same way should be treated equally. This principle is based on the idea that those who possess the same resources and abilities face the same obligations and should not be given preferential tax treatment. As such, horizontal equity attempts to create more balance in the taxation of different income brackets and make the system fairer for all taxpayers.
From a philosophical point of view, many people have argued in favor of horizontal equity as it is a more neutral and just system of taxation, as compared to other more progressive, regressive, or flat system taxation models. In the end, the aim of horizontal equity is to provide all taxpayers with equal opportunities and fair treatment.