THE ABILITY-TO-PAY PRINCIPLE
Another way to evaluate the equity of a tax system is called the ability-to-pay
principle, which states that taxes should be levied on a person according to how
well that person can shoulder the burden. This principle is sometimes justified by
the claim that all citizens should make an “equal sacrifice” to support the government.
The magnitude of a person’s sacrifice, however, depends not only on the
size of his tax payment but also on his income and other circumstances. A $1,000
tax paid by a poor person may require a larger sacrifice than a $10,000 tax paid by
a rich one.
Another way to evaluate the equity of a tax system is called the ability-to-pay
principle, which states that taxes should be levied on a person according to how
well that person can shoulder the burden. This principle is sometimes justified by
the claim that all citizens should make an “equal sacrifice” to support the government.
The magnitude of a person’s sacrifice, however, depends not only on the
size of his tax payment but also on his income and other circumstances. A $1,000
tax paid by a poor person may require a larger sacrifice than a $10,000 tax paid by
a rich one.
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