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VERTICAL EQUITY: A system of taxes that treats unequal people unequally. In other words, if you make the less income than someone else and pay fewer personal income taxes, then we have vertical equity.

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TAXATION PRINCIPLES

Taxes are the mandatory payments made by members of society to governments to finance government operations. The study of public finance identifies several key principles of taxation -- tax effects (revenue and allocation), tax proportionality (proportional, progressive, and regressive), tax payments (benefit and ability-to-pay), tax equity (horizontal and vertical).

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