The federal income tax law allows individuals whose property is destroyed by a natural disaster such as a fire or hurricane to reduce their taxable income by the amount of their financial loss. This rule is intended to improve the

Horizontal Equity of tax

Explanation:

The Horizontal equity of cash is a logic that people of similar assets and income should be paying the same taxes thereby encouraging tax neutrality.

A person whose property is destroyed by a natural disaster such as a fire or hurricane will see their tax paying ability diminished and so should be paying a tax that is reflective of their reduced number of assets and the money they will have to pay to replace it.

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