Basic Structure Fiqure 15.1 shows the series of steps used to compute a person's tax liability. Step 1: Compute Adjusted Gross Income (AGI) Step 2: Convert AG/ into taxable income by subtracting exemptions and deductions Step 3: Compute tax due by applying a rate schedule, and subtracting tax credits
Policy analysis is hard Why is it so hard to tell what's going on with government actions? Consider lowering income tax rates. Will lowering taxes increase work effort and labor supply? · Unlike the physical and natural sciences, difficult to perform carefully controlled experiments on the economy