I disagree with former IRS Commissioner Don Alexander. Sometimes the IRS is the best, most efficient agency to administer a subsidy. And if we want to encourage low-income families to work—a key premise of welfare reform—refundable tax credits make a lot of sense.

Economists can't seem to agree about whether the corporate tax falls on the rich or the poor. We pretty much concur that sales and payroll taxes are regressive and that income and estate taxes are progressive, but we argue endlessly about whether the burden of the corporate tax falls more on the wealthy or the middle class.

Typically, TPC measures the impact of tax laws and proposals in terms of average tax rates. This gives a good measure of how taxes affect our pocketbooks, but economists also like to examine how taxes affect economic incentives. For that purpose, the effective marginal tax rate is most apt. That is, how much tax do we pay on an additional dollar of income. This is important because marginal rates affect the incentive to work that extra hour or to engage in tax avoidance.