Title: Ability-To-Pay Taxation Definition
Headings: Ability-To-Pay Taxation
Ability-To-Pay Taxation
What Is Ability-To-Pay Taxation?
Key Takeaways
Understanding the Ability-To-Pay Principle
History of Ability-to-Pay Taxation
Arguments for Progressive Taxation
Criticism of Ability-to-Pay Taxation
Progressive Taxation and Inequality

Content: that is in proportion to the revenue which they respectively enjoy under the protection of the state.” Arguments for Progressive Taxation
Advocates of ability-to-pay taxation argue that those who have benefitted most from the nation’s way of life in the form of higher incomes and greater wealth can afford and should be obligated to give back a little more to keep the system running. The argument is that the society that government tax revenue has helped build— infrastructure such as highways and fiberoptic communications networks, a strong military, public schools, a free market system—provide the environment in which their success is possible and in which they can continue to enjoy that success. Criticism of Ability-to-Pay Taxation
Critics of progressive taxation argue that it is fundamentally unfair. They say it penalizes hard work and success and reduces the incentive to make more money. Many argue that everyone should pay the same income-tax rate—a "flat tax"—to make the system more equitable. Progressive Taxation and Inequality
While the U.S. still maintains a progressive tax system, tax rates for the rich have plummeted over the past several decades. When President Ronald Reagan took office in 1981, the highest income tax bracket for individuals was 70%. In 2020, the top rate for incomes is 37%. Meanwhile, inequality has reached levels not seen in at least a century.