Taxes

What to tax, fairness, incentives, and the cost of collecting taxes.

Issue discussion in preparation.

Principles

Tax policy must account for who ultimately pays and how behavior changes.
Distinguish average from marginal tax rates and include payroll taxes, state taxes, and benefit withdrawals.

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Which rate helps estimate the tax on an additional dollar of earnings?

The average tax rate alone in every case.

The combined marginal rate, including relevant taxes and benefit withdrawals.

The rate on the first dollar alone in every case.

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