How to Summarize and Interpret Income Tax Schedules

This note describes how income tax systems can be described as a combination of lumpsums and marginal tax rates and plotted in a summary chart. Such summaries can help in understanding the impact of tax reforms on tax systems.
READ MORE...
Volume/Issue: Volume 2025 Issue 007
Publication date: September 2025
ISBN: 9798229026352
$5.00
Add to Cart by clicking price of the language and format you'd like to purchase
Available Languages and Formats
English
Prices in red indicate formats that are not yet available but are forthcoming.
Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Labor , Economics- Macroeconomics , Taxation - General , Income Tax , Marginal Tax Rate , Average Tax Rate , Non-wage benefits , Income tax systems , Marginal effective tax rate , Average effective tax rate , Tax allowances , Income , Social security contributions

Summary

This note describes how most features of an income tax system (and to some extent social security and welfare) can be described as a combination of lumpsums and marginal tax rates and plotted in a summary chart. While this is by no means a new method, applying it consistently can help tremendously in understanding the impact of tax reforms on tax systems, including by identifying any unintentional humps or notches in tax schedules. This note uses this approach to discuss, for example, universal basic incomes, the issue of whether tax allowances should be phased out, and the difference between tax credits and allowances. It also points to the limitations of the approach, such as conditions that cannot be summarized in such tax schedules.