1. Please describe the objective approach of ability to pay in economics according to HL Ahuja.

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Expert Solution

The objective approach to the principle of ability to pay takes the objective basis of taxation into account, which measures the ability to pay correctly. On this issue, too, there is even no agreement. Income, however, is widely regarded as the best predictor of payability.
The explanation is that the income of an individual determines the power of a person over resources over a time to spend or to add to his property. However, the ability to pay does not increase directly with regard to money income. it can be noted.
The ability to pay raises in excess of the sales level. It is the basis for the logic of gradual income tax.
Further, in order to ensure equity in taxing income distinction ought to be made between earned income and unearned income, and considerations should also be given for a number of dependents on the person paying the tax.
Moreover, a distinction should be made between earned income and unearned income in order to ensure equity in taxing income and for a number of dependants on the tax payer, considerations should be made.

Rahul Sunny answered 1 year ago

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