Tax Revenue and Economic Performance Analysis

Assessing the individual income tax Economic Efficiency Fairness Administrative Burden Stability • Provides a disincentive to work ⚫ IIT penalizes savings in comparison to consumption tax (mitigated by tax breaks on retirement savings) • High rates (especially in higher incomes) may prompt tax avoidance and lower potential to generate revenue • Progressive, a common mechanism for redistribution. • Moderate compliance costs and moderate administrative costs by the government IIT revenue is more volatile than GET revenue 30

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