Ability to Pay
The principle that taxes should vary according to an individual's level of wealth or income. Investopedia Says:
The application of this principle is a progressive tax system, which is considered to be characteristic of a socialist sentiment. Many hard-line classical economists like Adam Smith believed any elements of socialism would destroy the initiative of the population within a free market economy. However, many countries have blended capitalism and socialism with a great degree of success. Related Terms:
Classical Economics
Economics
Flat Tax
Income Tax
Invisible Hand
Progressive Tax
Tax Bracket |