Summing Up the Key Ideas: Match the following terms to the correct definitions. A. Vertical equity D. Regressive tax B. Horizontal equity E. Proportional tax C. Progressive tax __ 1. Means that those with the same ability to pay taxes make the same tax payment. __ 2. If everyone pays the same share of their income in taxes.regardless of their level of incomeL __ 3. If people with a higher income pay a lower share of their income in taxes.C. __ 4. If people with a higher income pay a higher share of their income in taxes. D __ 5. Means that those who have a greater ability to pay taxes make a larger tax payment.

## Step 1<br />The term "Horizontal equity" refers to the principle that individuals with the same ability to pay taxes should make the same tax payment. This means that two individuals with the same income should pay the same amount of taxes.<br /><br />## Step 2<br />The term "Proportional tax" means that everyone pays the same share of their income in taxes, regardless of their level of income. This is also known as a flat tax, where the tax rate remains constant regardless of the amount subject to taxation.<br /><br />## Step 3<br />The term "Regressive tax" is characterized by the fact that people with a higher income pay a lower share of their income in taxes. This is in contrast to a progressive tax, where the tax rate increases as the taxable amount increases.<br /><br />## Step 4<br />The term "Progressive tax" means that people with a higher income pay a higher share of their income in taxes. This is the opposite of a regressive tax, where the tax rate decreases as the taxable amount increases.<br /><br />## Step 5<br />The term "Vertical equity" refers to the principle that those who have a greater ability to pay taxes make a larger tax payment. This means that individuals with higher incomes should pay more in taxes than those with lower incomes.