Chapter

Tax Basics

in Fair Not Flat

Published by University of Chicago Press

Published in print April 2002 | ISBN: 9780226555607
Published online March 2013 | e-ISBN: 9780226555669 | DOI: http://dx.doi.org/10.7208/chicago/9780226555669.003.0002
Tax Basics

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Bases and rates are the typical concerns of tax policymakers. Making a fair choice about the tax base and rate structure involves understanding when in people's lives they are being and should be taxed: when they work, save, borrow, or spend. The base of a sales tax is the value of whatever goods and services the tax covers. The base of a property tax is the value of property. The income tax has a more complicated rate structure. Different levels of income are taxed at different marginal rates. These ascending rate brackets produce progressivity in the income tax. The rich pay a higher percentage of their income in tax than the not-rich. An income tax is supposed to tax all consumption and all savings. Because the inconsistencies of the income tax relate more often than not to its failure to tax savings—the income tax allows a deduction for large amounts of savings and fails to reach other forms of it.

Keywords: income tax; rates; policymakers; tax savings; property; savings

Chapter.  6442 words.  Illustrated.

Subjects: Political Economy

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