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Compare the income tax and consumption tax in terms of vertical equity, assuming that both tax...

Compare the income tax and consumption tax in terms of vertical equity, assuming that both tax all people at the same rate (for example, a 20% tax on income and a 20% sales tax).

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Consider the same example, a 20% tax on income and 20% tax on sales. This can get to impact considerably due to the fact that income tax is a direct tax where the people are directly effected by this and this can get to detail motivate them to work more and more with which the production decreases and with which the supply decreases. If the sales tax is 20%, then the effect of tax is on the people indirectly and the people consume less products and this can get to decrease the demand in the market.

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