Block Averaging Block averaging gives taxpayers the option to recalculate their tax liabilities in the current year and the four immediately preceding consecutive years by prorating the aggregate income equally over the period.b The difference between the actual taxes paid and the recalculated amount is refunded. [...] The average marginal tax rate that is normally applicable to the first one-fifth of the income between the current income and the threshold is applied to the whole of the difference between these amounts. [...] Similarly, the the evidence on the adverse effects of the tax professional or business income of self-employed penalty on the incentive for entrepreneurship. [...] To obtain the fluctuation penalty for this individual (over a period of two years), the total at the bottom of column (9) is subtracted from the total at the bottom of column (5), and the difference is divided by the total real income indicated at the bottom of column (6). [...] Here, it is assumed that the taxpayer averaging formula is equivalent to a reduction in the repays the tax deferral by the final year of the personal average tax rate of individuals in the lowest sample (2010).
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