What is the difference between marginal and average tax rates? Q.What is the difference between marginal and average tax rates? A.Average tax rates measure tax burden, while marginal tax rates measure the impact of taxes on incentives to earn, save, invest, or spend. Read more about What is the difference between marginal and average tax rates?
What policy reforms could simplify the tax code? Q.What policy reforms could simplify the tax code? A.Reducing the number of distinctions among economic activities and taxpayers’ characteristics would simplify the code, reducing both taxpayers’ compliance costs and governmental administrative costs. Some distinctions among taxpayers promote fairness, so there are trade-offs among goals, but the tax law could be simplified without compromising equity. Read more about What policy reforms could simplify the tax code?
How should progressivity be measured? Q.How should progressivity be measured? A.A broad definition of progressivity, that tax burdens rise with household income, masks a host of ambiguities in measuring the effect of a tax change. The percentage change in after-tax income is the most reliable measure of the progressivity of such a change. Read more about How should progressivity be measured?
