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Taxing Possibilities

A recent article on the implications of filing taxes jointly had an interesting graphic that is fun to discuss with your students.

Article: http://www.nytimes.com/interactive/2015/04/16/upshot/marriage-penalty-couples-income.html

Marriage_tax

This visualization has a lot of quantitative information to unpack!  I ask them questions such as:

  1. Why does the vertical axis start at 50-50 and not 0-100?
  2. In terms of paying taxes, is it better for a married couple without children to have their income split evenly between both people or to have a single earner?
  3. How is the percentage tax penalty/bonus being computed?
  4. Why don’t they color the chart according to the absolute $ size of the penalty/bonus?  Hint: Compare two different points on the graph with the same percentage penalty/bonus.

What I really like about this article is the reasoning behind the claim that there are 3 possible goals when developing a taxation system, but countries cannot meet all three.  Can you figure out why?

3 tax options

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