What is ability to pay theory of taxation?

The ability to pay theory of taxation posits that individuals should contribute to government revenue in proportion to their financial capacity. This principle suggests that those with greater income or wealth should pay higher taxes, as they are more capable of bearing the financial burden. The theory aims to promote equity in taxation, ensuring that tax obligations are fair and reflective of individuals' economic situations. Ultimately, it supports the idea that taxation should be based on one's economic ability rather than fixed rates or consumption levels.