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October 15, 2018 

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LOGROLLING: A systematic exchange of votes by politicians to obtain approval of specific legislation. That is, Senator Grapht agrees to vote for Senator Brybe's pet project if Senator Brybe votes for Senator Grapht's favorite piece of legislation. Such logrolling can be explicit or implicit. The explicit kind involves two separate bills, in which each politician is forced to "go on record" with a vote. The implicit kind, which many politicians favor, is where several separate programs are wrapped into a single bill. Every politician can then tell the folks back home that they really only wanted the "one thing" that helped their constituencies the most, but had to vote for "other things" as well. Logrolling is big reason our government is big and prone to inefficiency.

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HORIZONTAL EQUITY:

A tax equity principle stating that people with the same ability to pay taxes should pay the same amount of taxes. This is one of two equity principles related to the ability-to-pay principle. The other is vertical equity, which states that people with a different ability to pay taxes should pay a different amount of taxes.
Horizontal equity is a basic "fairness" notion of government taxation. If government needs to collect taxes from members of society to finance the provision of public goods and other government operations, then it makes sense to collect those taxes in a fair and equitable manner. One noted criterion of equity is the ability-to-pay principle, stating that taxes should be collected from those who can afford to pay, those with ability to pay reflected by income.

Using the ability-to-pay as the criterion for taxes, it also makes sense to collect the same amount of taxes from those with the same ability to pay. This across the board tax equality is horizontal equity.

Suppose, for example, that Jonathan McJohnson earns $50,000 of income as a junior executive at OmniConglomerate, Inc. and pays $5,000 income taxes, a rate of 10%. Horizontal equity results if Manny Mustard, the proprietor of Manny Mustard's House of Sandwich, pays a like $5,000 of taxes on a like $50,000 of income earned from his sandwich-making business.

Horizontal equity is violated if people with the same ability to pay, or income, pay different taxes. If Jonathan McJohnson and Manny Mustard both $50,000 of income, but due to a special tax deduction for home ownership, Jonathan pays only $2,500 in taxes while Manny pays $5,000, then horizontal equity is not achieved.

A related tax equity principle is vertical equity. Vertical equity holds if people with different abilities to pay, that is, different income, pay different taxes. Vertical equity is violated if people with different abilities pay the same taxes.

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Recommended Citation:

HORIZONTAL EQUITY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: October 15, 2018].


Check Out These Related Terms...

     | tax equity | vertical equity | taxation principles | taxation basics | ability-to-pay principle | benefit principle | tax proportionality | proportional tax | progressive tax | regressive tax | tax effects | revenue effect | allocation effect | tax efficiency | tax incidence | tax wedge | deadweight loss |


Or For A Little Background...

     | taxes | government functions | efficiency | equity | distribution standards | public finance | allocation | normative economics | economic goals | public goods | near-public goods | consumption rivalry | nonpayer excludability |


And For Further Study...

     | public choice | good types | market failures | public goods: demand | public goods: efficiency | tax multiplier | personal tax and nontax payments | transfer payments |


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