Abiblo Economics - Ability to Pay

​Ability to Pay 
Ability to pay is a principle which indicates that any tax should fall on those who able to pay. Taking into consideration of ability to pay means that the payment of tax increase with the observed assets or income of the tax payers. 
 
Earning capacity should also be noted. The objection to ability to pay are that earning capacity is unobservable and that the taxing will reduce the the income and the incentive to work. The collection of taxes are unpopular move to those who are unable to pay. 
 
Ability to pay is opposite to the benefit principle. In terms of benefit principle, only those who benefit from any given public expenditure should be taxed. 
 
The tax revenue is useful for income redistribution and to pay for public goods.Due to the fact that the revenue is  important in running the modern society and therefore taxation seems inevitable.