| Ability to pay | the principle applied to taxation, whereby taxes vary in proportion to a taxpayer's financial resources
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| Benefits received | the principle applied to taxation, whereby taxes are geared to the benefits each taxpayer gains from government activity
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| Lorenz curve | a graph showing the cumulative distribution of income among a country's households
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| Means testing | a procedure whereby transfer payments vary according to a recipient's income
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| Poverty | a situation in which a person's income is inadequate to provide the necessities of life
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| Poverty line | an income level below which a household is classified as poor
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| Progressive tax | a tax that increases as a proportion of income as income increases
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| Proportional tax | a tax that remains constant as a proportion of income for all incomes
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| Regressive tax | a tax that decreases as a proportion of income as income increases
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| Universality | the principle applied to transfer payments, whereby benefits are provided to all, regardless of income
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| Wealth | ownership of financial assets, such as stocks and bonds, or real assets, such as buildings and land
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| Welfare society | a society in which the government plays a major role in attempting to ensure the economic well-being of its citizens
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2002 McGraw-Hill Higher Education