Which of the following is a characteristic of the 'Vertical Equity' principle in taxation?
A. Taxes should be independent of income
B. Only equal absolute burdens are fair
C. Taxpayers with greater ability to pay should bear a larger tax burden
D. All taxpayers should pay the same absolute amount
Answer: Option C
Solution (By JKSSB Mock Tests)
Vertical equity requires that taxpayers with greater ability to pay contribute more in taxes, which is the ethical foundation for progressive taxation.
Explanation:
Disguised, seasonal and open unemployment are common in developing countries. The natural rate of unemployment is a concept more relevant to developed economies and macroeconomic policy.
Explanation:
Social preferences encompass motives such as altruism, inequity aversion, reciprocity and spite that make an individual’s utility depend on the payoffs or actions of other people.
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