Someone must benefit from tax complexity - what does the number of degrees of separation of you from one of those people tell you about the need for fundamental tax reform?
I bring this up because the graph shown in this Marginal Revolution post entitled "Tax Reform" has been showing up all over the blogosphere lately (also see this additional Marginal Revolution about how there can be zero marginal tax rates at middle incomes). Clearly, our system of tax rates is far more complex than just about anyone realizes.
The original version is on pg. 4 of a book entitled Towards Fundamental Tax Reform edited by Alan Auerbach and Kevin Hassett. This can be downloaded for free. I recommend looking it over - it's not quite as clear, but it is more disturbing because it included the enormous negative marginal tax rates that apply at low incomes.
Marginal tax rates are important for economists because they tell us about how people make decisions, but this misses the big point up there in the first paragraph.
UPDATE: I see now that Winterspeak has hit on the same source graph that I did, and post both the common one floating around the blogosphere and the more complete original.
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