How should changes in tax progressivity be measured? Q.How should changes in tax progressivity be measured? A.A broad definition of tax progressivity, that tax burdens rise with household income, masks a host of ambiguities in measuring the effect of a tax change. In our distribution tables, TPC emphasizes the percentage change in after-tax income because it is the most reliable measure of the progressivity of such a change. Read more about How should changes in tax progressivity be measured?
How do federal income tax rates work? Q.How do federal income tax rates work? A.The federal individual income tax has seven tax rates that rise with income. Each rate applies only to income in a specific range (tax bracket). Read more about How do federal income tax rates work?
What is the Flat Tax? Q.What is the Flat Tax? A.While any tax system with flat rates could be called a flat tax, the name is usually reserved for a system developed by Robert Hall and Alvin Rabushka in 1985. Their flat tax is really a two-part VAT: All value added except wages is taxed at the business level and wages are taxed at the individual level at the same flat rate but with an exemption related to family size. Read more about What is the Flat Tax?