The tax-benefit interface
1 February 2019
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.