An enduring debate among public finance economists concerns the desirability of individual or family-based taxation. Assuming that we want a tax system that is progressive, marriage-neutral, and satisfies horizontal equity. Using a simple example, explain:
a. How does individual based taxation perform with the three criteria above? Explain
b. How does family based taxation perform? Explain
c. Given the above results, which unit of taxation would you prefer, based on efficiency and equity?
d. How does the spousal tax credit overcome some of the problems with individual based taxation above?