Ability-to-Pay principle is principle of taxation which asserts that the amount of tax levied on an economic entity should be directly proportional to the ability of the entity to pay taxes. Ability-to-pay taxation is a progressive taxation principle that maintains that taxes should be levied according to a taxpayer's ability to pay. The ability-to-pay approach treats government revenue and expenditures separately. The principle of ability to pay aims to ensure that the tax amounts due increase according with the growth of the greatness achieved by the tax, so that the greater the capacity, the greater the impact of taxation to be borne by the citizen-taxpayer. The usual and indeed the only serious justification of ability to pay is on grounds of sacrifice. ability-to-pay principle (of taxation) 応能原則 [おうのうげんそく] (a) principle, (a) reason: 一理 [いちり] (Buddh) individual concrete phenomenon (as opposed to a general principle) 事 [じ] (comp) general principle: 一般原則 [いっぱんげんそく] (comp) switching capacity, switching ability It is held to justify progressive taxation under any one of three possible inter- pretations of sacrifice: the equal, equal-proportional, and least-sacrifice theories. The ability-to-pay principle of taxation states that people with higher incomes have a greater ability to pay taxes than people with lower incomes. Two basic indices (measures) of the ability to pay, viz., income and wealth provide a justification for progressive personal taxes. Individuals who have lower incomes are thought to have a lower ability to pay tax and hence are taxed at a lower rate. According to the theory, taxes should be based upon the amount of money people earn. Taxes are based on taxpayers’ ability to pay; there is no quid pro quo.

ability-to-pay principle of taxation the belief that people should be taxed according to their ability to pay, regardless of the benefits they receive accelerated depreciation plication of the principle of ability to pay. The equality principle captures both the ability to pay and the benefit principles which plays a pivotal role in taxation (Martinez-Vazguez, 2001:4; Rai, 2004:58; Batt, 2012:71). Proponents argue that the approach is fairer to people who don't have the means to pay taxes; critics argue that the approach punishes people for financial success. Taxes paid are seen as a sacrifice by taxpayers, which raises the issues of what the sacrifice of each taxpayer should be and how it … In Brazil, however, the indirect tax incidence (e.g.

Definition: Ability to pay principle is the concept that individuals shouldn’t be required to pay taxes beyond their wherewithal to pay the taxes. Therefore, a person having high income and wealth should be taxed more and less tax should be levied on those having low income and wealth provided other things remain constant. The ability to pay principle distinguishes between the horizontal equality and vertical equality that is embedded The principle that taxes should be levied on the basis of taxpayers' ability to pay. The measures of ability differ from tax to tax. This form of progressive taxation is viewed as being fair and equitable as it imposes additional taxes on those who can afford to pay. The ability-to-pay principle states that taxes should be based on the ability to pay taxes, that is, those who have more income should pay more taxes. This principle also makes a great deal of sense, especially for the provision of public goods that are consumed by all. THE ABILITY-TO-PAY THEORY OF TAXATION Ability to pay, the dominant theory of taxation, is usually interpreted in terms of sacrifice. A good example of a tax system that meets this principle is the progressive tax …

If everyone benefits from public goods, without exclusion, then everyone should pay. This normally leads to the view that as income or wealth increases, its marginal utility (its value to its owner) decreases so that higher rates of tax can be levied on the higher slices.

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