Defending Dignity A Manual for National Human Rights Institutions on Monitoring Economic, Social and Cultural Rights 4. Family A hires a tax accountant, who is able to shift a portion of the family’s tax liabilities overseas. As a result of this tax avoidance, only $100,000 of the family’s income in the country is reported to the tax authorities. Repeat the calculations to determine the amount Family A would pay in taxes as a proportion of their pre-tax income. What amount of income tax do they pay as a percentage of their overall real income? Family A pays 5% on their first $40,000, 10% on their next $40,000 and 15% on their last $20,000. This equals $9,000, which is 6% of their total income of $150,000. 5. How would you say this tax system (income and VAT) affects both families? What if the income rate of the top brackets was decreased and the VAT rate was increased without exemptions? Family B pays a higher percentage of their income in VAT, so increasing it would impose a bigger burden on them. Family A pays a higher percentage of their income in income tax, so decreasing it would reduce their tax burden. 6. What general or preliminary conclusions can you draw from this simplified exercise? In particular, how does the tax system affect each family differently? The tax system is regressive because the burden on the poorer household is notably higher than on the richer household. 7. Can you distinguish from these numbers who benefits? What else would we need to know to determine whether the tax system is equitable or not? To determine whether the tax system is equitable or not we would also need to know what other subsidies, benefits and entitlements each family received. Chapter 13: Evaluating contextual factors 1. Review the measurement tools outlined above (Worldwide Governance Indicators, Resource Governance Index, Global Corruption Barometer). How does your country perform on their most recent rankings? The answer to this question will be country-specific. 2. Compare each of the measurement tools. How would you assess them in terms of how clearly defined the indicators are, how relevant and legitimate they are, how transparent their data sources are (see Chapter 4 for a discussion of these criteria)? Tip: Find the methodology section for each of these tools to help answer this question. 3. Can you suggest any other indicators that measure the broader contextual factors discussed in this chapter? The answer to this question will be country-specific. 174