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QUALITY OF LIFE: A common term used to indicate the overall level of well-being or welfare of a person or group of people, taking into account both monetary and non-monetary factors. This notion is theoretically synonymous with utility and the satisfaction of wants and needs. However, from a practical standpoint, attempts have been made to measure the quality of life, primarily as a means of comparison between communities. Quality of life measures are composite indexes based on monetary factors such as income, wages, living costs, and taxes, combined with non-monetary factors such as crime rate, air quality, and education level.
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                           VERTICAL EQUITY: A tax equity principle stating that people with a different ability to pay taxes should pay a different amount of taxes. This is one of two equity principles related to the ability-to-pay principle. The other is horizontal equity, which states that people with the same ability to pay taxes should pay the same amount of taxes. Vertical 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 a different amount of taxes from those with a different ability to pay. Those who have greater ability, pay more taxes. Those with less ability, pay fewer taxes. This across the board tax equality is vertical 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%. Vertical equity results if Lisa Quirkenstone, a clerk at the MegaMart Discount Warehouse Supercenter, pays $500 of taxes on $5,000 of income earned from her job, also 10%. Jonathan has greater ability and pays more taxes. Vertical equity is violated if people with a different ability to pay, or income, pay the same taxes. If Jonathan McJohnson has $5,000 of income and Lisa Quirkenstone has $5,000 of income, but due to a special tax deduction for home ownership, Jonathan pays the same $500 in taxes as Lisa, then vertical equity is not achieved. A related tax equity principle is horizontal equity. Horizontal equity holds if people with the same ability to pay, that is, the same income, pay the same tax. Horizontal equity is violated if people with the same ability, pay different taxes.
Recommended Citation:VERTICAL EQUITY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: April 25, 2025].
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Okun's Law posits that the unemployment rate increases by 1% for every 2% gap between real GDP and full-employment real GDP.
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"The greatest things ever done on Earth have been done little by little. " -- William Jennings Bryan
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AMB
Adjusted Monetary Base
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