Tax Policy

Abstract

This chapter discusses the theory and practice of tax design to achieve an efficient and equitable outcome in support of inclusive growth. It starts with a discussion of the key principles from tax theory to guide practical tax design. Then, it elaborates on the practice of tax policy making, thereby discussing key choices in the structure of the personal income tax on labor, capital income, wealth, the corporate income tax, and consumption taxes. The chapter concludes by highlighting the political economy considerations of the issues with concrete recommendations as to how to implement tax reform.