The ability-to-pay principle of taxation asserts that individuals with higher incomes should pay more taxes, promoting fairness and equity in tax distribution.
The ability-to-pay principle of taxation states that individuals with higher incomes should pay more taxes. This principle suggests that as income increases, the amount paid in taxes should also rise. It is aimed at creating a tax system where those who can afford to contribute more do so.
For example, if two individuals earn different incomes, the one with a higher income would be expected to pay a larger sum in taxes compared to the person with a lower income. This principle aligns with the idea of fairness in tax distribution and ensuring that the tax burden is distributed equitably based on financial capacity.
Contrary to the belief that everyone should pay the same amount in taxes, the ability-to-pay principle advocates for a progressive tax system where those with higher incomes shoulder a greater tax responsibility, reflecting their ability to contribute to public services.
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