The Tax-benefit Interface
This article discusses the interaction of the tax and benefit systems (the tax–benefit interface). It shows profiles of combined taxation and benefit abatement (effective marginal tax rate profiles) for two families, before discussing lessons that could be drawn from these profiles for policy. One theme that emerges is the need for simplification. Yet rather than pursuing simplification through grands projets, such as a universal basic income, what is needed is a focus on detailed design issues, such as how tightly programmes respond to fluctuations in hours of work and incomes.
Permission: In the interest of promoting debate and wider dissemination, the IGPS encourages use of all or part of the articles appearing in PQ, where there is no element of commercial gain. Appropriate acknowledgement of both author and source should be made in all cases. The IGPS retains copyright. Please direct requests for permission to reprint articles from this publication to email@example.com.