Ability-to-Pay

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Breadcrumb Abstract Shape

Ability-to-Pay

Ability-to-pay is the principle that a person or business should pay taxes based on their financial capacity.

In simple terms:

The more income or wealth someone has,

The more tax they should contribute.

This principle supports fair taxation, where higher-income individuals pay higher taxes compared to those with lower income.

Example: Income tax systems with higher tax rates for higher income levels follow the ability-to-pay principle.