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A flat marginal rate with a curved average rate certainly is impossible: http://en.wikipedia.org/wiki/Fundamental_theorem_of_calculus http://en.wikipedia.org/w
by waqf 16y ago
A flat marginal rate with a curved average rate certainly is impossible:
http://en.wikipedia.org/wiki/Fundamental_theorem_of_calculus http://en.wikipedia.org/wiki/Fundamental_theorem_of_calculus
- CWuestefeld 16y agoThe theorem only works for continuous functions. Tax rates are anything but continuous. They have sharp elbows (e.g., AMT), and some taxes wink into existence and back out again within a finite range (e.g., EIC). I'm not sure that these exceptions are sufficient to allow it to work out, but I'm pretty sure that this rule isn't the impediment.
- cynicalkane 16y agoThen the marginal rate must be flat except for discontinuities. It will effectively not be a flat marginal rate except for finite intervals. And if the tax burden is meaningfully curved, the tax rate must have discontinuities in meaningful places.
- orangecat 16y agoWouldn't a completely flat tax with a fixed deduction/rebate achieve that? Say, 25% of your income minus $10k. The marginal rate is always 25%, the average rate is negative for incomes below $40k and asymptotically approaches 25% as it increases.