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marginal tax rate (H2)<br />The amount of tax paid on an extra unit of money income. In the study of labour supply, marginal tax rates are often calculated to see whether high marginal rates have an incentive or disincentive effect on labour supply. An incentive effect occurs if a taxpayer has a target post-tax income achievable only by working more after a rise in the marginal rate of tax; a disincentive effect occurs if a higher marginal tax rate makes the taxpayer opt for leisure instead of work.<br /><em>See also:</em> average tax rate
public commodities problem (H4) Deciding how much of a public commodity to have when it is not clear whether the commodity is a GOOD at all in the sense of conferring a net benefit on a society.<br /><em>See also:</em> public good
payroll tax (H2)<br />A tax on labour usually equal to a fixed proportion of the wage bill or of an individual employee's remuneration. In the USA, this tax became part of the federal revenue system by the Social Security Act 1935 when it was introduced to finance social security programmes. National insurance in the UK is based on this principle.
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