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                                                   Types of Equity

1. Horizontal Equity - People who are equally able to pay should bear the same burden.
2. Marriage Penalty - Joint return places married couple in a higher bracket thereby paying more than two single individuals. Earned Income - wages, salaries Non-earned Income-stocks, and capital gains.
3. Vertical Equity - Those with higher incomes are better able to pay with fewer burdens therefore they should pay a higher percentage.. Those below a certain income level - the marginal utility of money is high. Marginal Tax Rate - tax rate applied to the last or additional income received.
4. Benefits Principle of Equity - Proceeds of a tax is directly allocated to a government service (Highway Trust Fund), gasoline tax, and motor vehicle fees.