30 Pages Posted: 5 Mar 2013 Last revised: 28 Mar 2013
Date Written: 2012
The role of Horizontal Equity (“HE”) in tax policy has continued to generate controversy and debate. One way to encapsulate the question after all this time is to ask — if we started with HE as our motivating concept in designing a tax system where would we be? If HE says treat equals the same, what does our tax system look like? The answer is — we don’t know because the term has no independent meaning for fairness and equality. We must turn to some theory of distributive justice to determine equality and to determine an appropriate tax burden. At this point HE collapses into one concept, which is generally referred to as Vertical Equity (“VE”). The crucial point is not that this single concept is VE, but that VE and HE are together a single concept which lacks normative content and is itself only a proxy for theories of distributive justice.
For those who remain committed to a gut sense that HE means something, we would say, “yes, but a different something.” While HE is not helpful in designing a tax system because it provides no guidance about what the system should look like, support for HE has persisted because of a shared belief that government should communicate the rationale for treating people differently. The difficulty is that while HE may tell us that government should communicate the rationale for different treatment, it does not tell us what that different treatment should be. Support for the role of HE may also be rooted in the notion that government should be even-handed in its enforcement of tax laws. HE is not helpful, however, in insuring even-handed enforcement since, in a world of finite resources, not every taxpayer can be audited. In deciding who should be audited, it is necessary to refer to something beyond HE. But perhaps the close link of tax policy to the process of tax policy creation and the administrative practice explains the unstated but visceral commitment to HE that has continued to spark debate over the past 20 years.
Suggested Citation: Suggested Citation
Repetti, James R. and Ring, Diane M., Horizontal Equity Revisited (2012). Florida Tax Review, Vol. 13, No. 3, 2012; Boston College Law School Legal Studies Research Paper 293. Available at SSRN: https://ssrn.com/abstract=2228259