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:
“A theory of the middle class: that it is not to be determined by its financial situation but rather by its relation to government. That is, one could shade down from an actual ruling or governing class to a class hopelessly out of relation to government, thinking of gov’t as beyond its control, of itself as wholly controlled by gov’t. Somewhere in between and in gradations is the group that has the sense that gov’t exists for it, and shapes its consciousness accordingly.”
—Lionel Trilling (1905–1975)
“In the theory of gender I began from zero. There is no masculine power or privilege I did not covet. But slowly, step by step, decade by decade, I was forced to acknowledge that even a woman of abnormal will cannot escape her hormonal identity.”
—Camille Paglia (b. 1947)
“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)