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Tax Equity definitions

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  • Tax Equity
    Fairness in distributing tax burdens, considering both who benefits and who can afford to pay, guiding tax system design.
  • Benefits Principle
    Concept where those receiving public services or advantages contribute to funding them through targeted taxes.
  • Ability to Pay Principle
    Guideline suggesting tax amounts should reflect financial capacity, ensuring equal sacrifice among taxpayers.
  • Disposable Income
    Funds remaining after taxes, used for personal expenses, indicating the impact of taxation on individual lifestyles.
  • Vertical Equity
    Approach where higher earners contribute more in taxes, aligning payments with income levels to promote fairness.
  • Horizontal Equity
    Standard aiming for equal tax treatment among individuals in similar financial circumstances, despite differing expenses.
  • Regressive Tax
    Structure where tax rates decrease as income rises, potentially placing a heavier burden on lower earners.
  • Proportional Tax
    System applying a constant tax rate to all income levels, resulting in higher total payments for those earning more.
  • Progressive Tax
    Arrangement where tax rates increase with income, ensuring those with greater means pay a higher percentage.
  • Tax Rate
    Percentage of income or value subject to taxation, varying by system and influencing total tax paid.
  • Tax Burden
    Extent of financial obligation imposed by taxes, shaped by income, expenses, and tax system structure.
  • Tax Revenue
    Funds collected by government through taxation, used for public services and infrastructure maintenance.
  • Ethical Considerations
    Factors influencing tax policy, such as fairness in accommodating medical or educational expenses.
  • Public Services
    Government-provided amenities funded by taxes, including road maintenance and waterway upkeep.
  • Tax System
    Framework determining how taxes are assessed and collected, balancing efficiency and fairness.