What is the principle of Tax Equity concerned with?

The principle of Tax Equity focuses on the fair treatment of taxpayers in the context of tax policies and systems. This principle asserts that individuals with similar financial capabilities should face similar tax burdens, meaning taxes should be proportional to one's ability to pay. It is an essential aspect of ensuring a just tax system, which contributes to the overall fairness and acceptance of taxation within society.

Tax equity encompasses both horizontal and vertical equity. Horizontal equity suggests that individuals with similar incomes should pay similar amounts in taxes, while vertical equity indicates that individuals with higher incomes should contribute a larger share of their resources compared to those with lower incomes.

Maximizing tax revenue, encouraging tax evasion, and providing exemptions for high-income earners do not align with the principle of tax equity. Instead, these aspects can potentially lead to inequities in the tax system, undermining the goal of fair treatment for all taxpayers.