Ability to Pay

What Does Ability to Pay Mean?
The principle that taxes should vary according to an individual's level of wealth or income.

Investopedia explains Ability to Pay
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.