Ability to pay

Ability to pay

Refers to the borrower's ability to make interest and principal payments on debts. See: Fixed charge coverage ratio.
In context of municipal bonds, refers to the issuer's present and future ability to create sufficient tax revenue to fulfill its contractual obligations, accounting for municipal income and property values.
In context of taxation, notion that tax rates should be determined according to income or wealth.

Ability to Pay

A principle stating that persons or corporations who earn the same amount of money should be taxed in the same way, and that those who earn more should be taxed more. For example, the principle states that two individuals making $50,000 per year should be taxed the same amount, regardless of how they earned their income, while someone making $100,000 per year should be taxed more than either of the other persons. Ability to pay is the idea behind the progressive tax system in place in many countries. See also: Horizontal equity.
References in classic literature ?
We have only, in the first place, to discover a sufficiently eligible practitioner; and as soon as we make our want--and shall I add, our ability to pay a premium?
He said that ability to pay should have nothing to do with the treatment offered.
Recent Acquisition Enables Credit Issuers to Gain Sharper View of Consumer's Ability to Pay
She has to be financially evaluated to see her about her ability to pay.
The DOL finalized an amendment to omit a three-day repayment requirement from the interest-free, unsecured loans it permits for plans when the ability to pay benefits is in jeopardy.
By law, every Polish citizen is entitled to health care, regardless of the ability to pay.
The only true test of ability to pay is income which is why I and my Liberal Democrat colleagues believe that the tax should be replaced with a local income tax based on ability to pay.
The addition of online bill pay will expand our customers' ability to pay vendor bills and invoices and track cash flow directly from within Peachtree.
Health minister John Hutton said: 'The Tories propose to reverse the founding principle of the NHS that care should be based on clinical need and not ability to pay, with equal access for all.
In their main findings the MLA'S noted that "wages and salaries, new technology, prescription drugs and a growing and aging population are the main cost drivers in Alberta's health care system," and recommend that "those with a greater ability to pay should contribute more than those with a lesser ability," including combining premiums with an annual deductible based on the ability to pay.
Cardiff's Liberal Democrat leader Rodney Berman said: 'It is inevitable with any tax there will be winners and losers but a local income tax would be paid on the ability to pay.
301(c)(1) and 316(a)(2), E&P is neither GAAP earnings nor taxable income; it is simply a measure of a corporation's ability to pay dividends from its economic earnings.