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When Marginal and Statutory Tax Rates Differ

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Publication Date: November 2008

Publisher(s): Tax Policy Center

Author(s): Benjamin H. Harris; Ruth Levine

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Banking and finance (Taxation and tax policy)

Keywords: Income and Wealth Distribution; Tax Distribution and Economic Trends; General Tax Policy; Simplification and Administration

Type: Report


From an economic perspective, marginal tax rates play a critical role in determining the consequences of a change in tax policy. In an uncomplicated tax system the marginal rate is simply equal to the statutory rate. For millions of taxpayers, however, marginal tax rates differ markedly from statutory rates. Because of the tax code's wide array of phase-ins and phaseouts the majority of taxpayers face a different marginal rate than their statutory rate. Marginal and statutory rates differ for about two-thirds of married filers and heads of households and for about one-third of single filers.