Impact of tax policy on filer's after-tax income

[jdebacker]

Plot concept: One important aspect of the tax system is how it affects the after-tax income of the taxpayers. The idea of this plot concept it to provide a visualization for the impact of the tax system on taxpayer's after-tax income by plotting their budget constraints under the baseline and reform policies. The FORTAX model of the UK tax system by Shaw and Sheppard provides output such as this:

Technical notes:

• The Tax Calculator can perform calculations from which one could create such a plot.
• The for US tax policy, one would replace the horizontal axis with pre-tax earnings (rather than hours).
• It might be illustrative to have the 45 degree line plotted also, so one could more easily see how tax systems affect after tax income.
• One would probably want to plot different lines for different filing statuses and different numbers of dependents. A good way to do this might be to have the plot show 3 lines - 45 degree, current law, and reform. A set of sliders would change the lines to represent the budget constraints for filers with different filing statuses or different numbers of dependents.