The Personal Income Tax Equation: Rate Structure and Tax Base
13 Pages Posted: 13 Aug 2009
Date Written: August, 12 2009
Abstract
Policymakers continue to debate the most appropriate way to tax personal income. Because these taxes are a major revenue source, the strategy adopted has important political implications. Unfortunately public discourse can be clouded by a lack of understanding of rate structure and tax base design. The purpose this report is to identify the defining characteristics and to explore the ways the states link them together. The paper provides an overview of tax rate structures and tax base prototypes and identifies dominant designs. The article then explores the strategic implications of no-tax and low-tax regimes and looks at current issues arising from federal legislation.
Keywords: Personal Income Tax, Rate Structure, Tax Base Design
JEL Classification: D 31, H71
Suggested Citation: Suggested Citation