horizontal equity

Horizontal equity in taxation is the principle that individuals in similar financial situations should pay the same amount in taxes. This means that two taxpayers with the same income and similar circumstances, such as family size or dependents, should be subject to the same tax liability.12

However, this principle is often not strictly followed in practice. Governments may intentionally create tax advantages for certain groups, like farmers or homeowners, for political reasons rather than purely economic ones. Debates about tax reform frequently center on whether these deviations from "equal treatment of equals" are justifiable. The concept of horizontal equity is a key component in determining if a tax system is fair, alongside vertical equity, which deals with fairness across different income levels.12