Week Three Textbook Problems - Running head WEEK THREE TEXTBOOK PROBLEMS 1 WEEK THREE TEXTBOOK PROBLEMS 2 Week Three Textbook Problems 1[LO 1.1 What are

Week Three Textbook Problems - Running head WEEK THREE...

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Running head: WEEK THREE TEXTBOOK PROBLEMS 1
WEEK THREE TEXTBOOK PROBLEMS 2 Week Three Textbook Problems 1. [LO 1.1] What are consumption taxes? 2. [LO 1.4] Differentiate horizontal from vertical equity. Horizontal equity suggests that people with like economic incomes or in the same income bracket should pay the same taxes. Horizontal equity is an important starting point for any tax system. Horizontal equity can be consistent with also achieving vertical equity. Horizontal equity is the equal treatment of equals and this is a means for achieving a distribution of tax burdens that is vertically equitable. Vertical Equity, on the other hand, suggests that taxpayers with higher income and resources must pay more in tax than taxpayers with low incomes. This is fulfilled through progressive taxation, where those higher income brackets have to pay a higher rate of tax on the proportion of their income that falls into the progressively higher bands. 3. [LO 1.4] When was the constitutional amendment permitting an income tax ratified? 4. [LO 1.4] What is a sin tax? A sin tax is a type of excise tax on goods that the government tries to discourage, such as tobacco and alcohol.
5. [LO 1.5] What are three objectives of income taxation?

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