For Ability To Pay we have terms and definitions in 3 topics. The topics are Finance, Investing and Tax.

Ability To Pay (Finance)

Refers to the borrower's ability to make interest and principal payments on debts. See: Fixed charge coverage ratio.

Ability To Pay (Investing)

The present and future capacity of a municipal bond issuer to generate enough tax revenue to meet its liabilities. To determine a municipality's ability to pay, all factors concerned with property values and municipal income are considered.

See Also: Municipal Bond

Ability To Pay (Tax)

People having differing amounts of wealth or earning different sums of income should pay tax as per their ‘ability to pay’ at different rates. It is a concept devised to be fair to everybody. All assets such as cars, stocks, homes, bonds, and savings accounts come under wealth, whereas salaries, wages, rent, interest, and dividends account for income.

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