The Design of the Tax System
PROBLEMS AND APPLICATIONS 1. In a published source or on the Internet, find out whether the U.S. federal government had a budget deficit or surplus last year. What do policymakers expect to happen over the next few years? (Hint: The website of the Congressional Budget...
The Design of the Tax System
CONCLUSION: THE TRADE-OFF BETWEEN EQUITY AND EFFICIENCY Almost everyone agrees that equity and efficiency are the two most important goals of the tax system. But often, these two goals conflict. Many proposed changes in the tax laws increase efficiency While...
The Design of the Tax System
CASE STUDY WHO PAYS THE CORPORATE INCOME TAX? The corporate income tax provides a good example of the importance of tax ‘incidence for tax policy. The corporate tax is popular among voters. After all, corporations are not people. Voters are always eager to have...
The Design of the Tax System
TAX INCIDENCE AND TAX EAULITY Tax incidence-the study of who bears the burden of taxes-is central to valuating tax equity. As we first saw in Chapter 6, the person who bears the burden of a tax is not always the person who gets the tax bill from the government....
The Design of the Tax System
CASE STUDY HORIZONTAL EQUITY AND THE MARRIAGE TAX The treatment of marriage provides an important example of how difficult it is to achieve horizontal equity in practice. Consider two couples who are exactly the same except that one couple is married and the...
The Design of the Tax System
The Flat-tax Revolution The more complicated a country’s tax system becomes, the easier it is for governments to make it more complicated still, in an accelerating process of proliferating insanity-until, perhaps, a limit of madness is reached and a spasm...
