Theory
In theory, governments withdraw resources from society in the form of taxation, and contribute resources back into society in the form of expenditures. However, the burdens of taxation are not borne equally by individuals, and the benefits of government expenditures are not distributed equally throughout society. As a result, the distribution of tax burdens and government expenditure benefits is an important economic question to those concerned with the equity of the fiscal system. When the economic incidence of taxation is combined with the economic incidence of government expenditures, the result is a measure of the overall increase or decrease in welfare that individuals enjoy from the state's taxing and spending policies. This is referred to as fiscal incidence.
Read more about this topic: Fiscal Incidence
Famous quotes containing the word theory:
“Frankly, these days, without a theory to go with it, I can’t see a painting.”
—Tom Wolfe (b. 1931)
“There never comes a point where a theory can be said to be true. The most that one can claim for any theory is that it has shared the successes of all its rivals and that it has passed at least one test which they have failed.”
—A.J. (Alfred Jules)
“The theory of rights enables us to rise and overthrow obstacles, but not to found a strong and lasting accord between all the elements which compose the nation.”
—Giuseppe Mazzini (1805–1872)