Use the following tax structure to answer questions a. and b.: Taxpayer Taxable Income Total Tax Howard $50,000 $10,000 Bernadette $150,000 $30,000 Sheldon $100,000 $20,000 Leonard $50,000 ? For this system to be considered fair in terms of horizontal equity, how much tax should the tax system require Leonard to pay? Sheldon and Bernadette agree that the tax system should be fair in the sense that it is vertically equitable, but Sheldon thinks that vertical equity should be assessed in terms of the tax dollars. Bernadette thinks it should be assessed based on the tax rate applied to taxpayers. Assuming Leonard pays the amount of tax from part a. that makes the tax system horizontally equitable, is Sheldon or Bernadette more likely to think that the tax structure above has vertical equity?

>> For the system to be fair in terms of horizontal equity, individuals with similar assets and income have to pay same amount of taxes. Here, Leonard has similar income as Howard. Therefore, both Leonard and Howard have to pay the same amount of tax which is $10000.
>> According to vertical equity taxes paid increase with income earned.
According to Sheldon equity need to be assessed in terms of tax dollars. Let’s find out tax paid per every 1000 dollars for all the cases for comparison
According to Bernadette tax rate should vary with increasing income.
https://d2vlcm61l7u1fs.cloudfront.net/media%2F54b%2F54b42f44-19f4-4548-8af1-596ef7598db2%2FphpDINe0b.png
Tax paid per 1000 is same for all. Therefore. Sheldon would feel that there is vertical equity.
Tax rate is uniform across. Therefore, Bernadette would think that there is no vertical equity.
 
“Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!”

What Students Are Saying About Us

.......... Customer ID: 12*** | Rating: ⭐⭐⭐⭐⭐
"Honestly, I was afraid to send my paper to you, but splendidwritings.com proved they are a trustworthy service. My essay was done in less than a day, and I received a brilliant piece. I didn’t even believe it was my essay at first 🙂 Great job, thank you!"

.......... Customer ID: 14***| Rating: ⭐⭐⭐⭐⭐
"The company has some nice prices and good content. I ordered a term paper here and got a very good one. I'll keep ordering from this website."

"Order a Custom Paper on Similar Assignment! No Plagiarism! Enjoy 20% Discount"