Ability to

This is not a technical term in economics; it is, however, frequently used as though it were - most frequently as a part of an ethical principle used in connection with the idea of fair taxation, viz. that a taxpayer's contribution ought to bear some relation to their 'ability to pay'. A strict definition might amount to this: ability to pay is the sum of an individual's tradable human and non-human capital, that is, their entire wealth, though it seems doubtful whether those who use the term actually do have this definition in mind. Some may have in mind no more than the individual's budget constraint. Cf. Willingness to Pay. See Progressivity, Regressivity.

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