Horizontal equity: I. II. III. IV. means that those taxpayers who have the greatest ability to pay the tax should pay the greatest proportion of the tax. means that two similarly situated taxpayers are taxed the same. exists when Michael and Sam each earn $12,000 a year and pay $1,200 in tax. exists when Avis, a single individual with 4 dependent children, and Art, a single individual with no dependents, both pay $2,400 income tax on equal $26,000 annual salaries. a. Statements III and IV are correct. b. Statements II and III are correct. c. Statements I and III are correct. d. Only statement IV is correct. e. Statements I, II, III, and IV are correct