Fiscal analysis of a targeted tax credit for taxpayers in the second bracket /

The assumptions and calculations underlying the simulation results were prepared by PBO and the responsibility for the use and interpretation of these data is entirely that of the author. [...] The amount that each individual within this tax bracket will receive from the redistribution of the $1.8 billion depends on the design of the new benefit. [...] Rather, the number of taxpayers in the second tax bracket decreases with taxable income (Summary Figure 2).2 Summary Figure 2 Number of Taxpayers ('000) Distribution of taxpayers in the second 1000 900 tax bracket, across taxable income 800 700 600 500 400 300 200 100 0 Taxable Income 2 Fiscal Analysis of a Targeted Tax Credit for Taxpayers in the Second Bracket 1. Introduction In January 2016, PB [...] Each approach requires an annual estimate of: • Tax revenues, accounting for behavioural effects, generated from the introduction of the new high-income tax bracket.4 • The number of taxpayers in the second tax-bracket for the same year.5 It is important to note that the timing of this redistribution is assumed to be simultaneous. [...] A simple equation for calculating the benefit using a decreasing linear function is to assume a base dollar benefit that is greater than zero for individuals with the minimum eligible taxable income ($45,283 in this case), and reducing that benefit by a proportion of taxable income (often referred to as a phase-out rate) that is greater than the minimum eligible income.