Horizontal Equity

Horizontal equity is a principle in taxation that suggests individuals with similar financial situations should be taxed equally. This means that people who earn the same amount of money should pay the same amount of taxes, ensuring fairness. If one person earning $50,000 pays more in taxes than another person earning $50,000, horizontal equity is not maintained. This concept aims to create fairness and prevent arbitrary differences in tax burdens among peers with comparable income levels.