Designing and Displaying the Income Tax Scale under Progressivity

Wojciech Stiller

Abstract


In most countries, a progressive tax is levied on the income of individuals. This article addresses the different design of a progressive tax scale taking into account the issue of the so-called tax bubbles that constitute an increased MTR. This feature of the tax function is a result of the exclusion of the high income taxpayers from the basic allowance or reduced tax rates. As shown in the article, this may lead to a higher tax burden under the joint taxation compared to the separate taxation. The analysis refers to the tax scales in Germany, Poland, the UK and the USA.


Keywords


average tax rate; bubbles; joint taxation; marginal tax rate; progressivity; tax scale

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References


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DOI: http://dx.doi.org/10.17951/h.2017.51.4.289
Date of publication: 2017-12-08 15:26:48
Date of submission: 2017-04-20 14:45:48


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