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Dictionary definition: ability to pay
- Article from:
- A Dictionary of Economics
- Author:
Copyright© A Dictionary of Economics 2002, originally published by Oxford University Press 2002. (Hide copyright information)
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ability to pay
The principle that any
tax
should fall on those who can afford to pay. Paying for
public goods
or
income
redistribution requires taxes: taking account of ability to pay means that these should increase with the income or assets of taxpayers, and as some minimum consumption is needed for subsistence, taxes should be progressive rather than proportional. Ability to pay is oppposed to the
benefit principle
, which suggests that only those who benefit ...