Deliberate Distortion
For more details on this topic, see Pigovian tax.Not all distortions are bad; Pigovian taxes create distortions that correct for externalities and therefore have a negative MCF.
Here, the fiscal distortion is deliberate, so as to compensate for externalities. "Sin taxes" are levied on products that incur additional costs to society, such as alcohol, tobacco and pollution. Ideally, these taxes raise the price to the exact level that the market would bear if the negative externalities were included in the price. Pigovian taxes are often preferable to outright prohibition, since prohibition incites trafficking, often resulting in crime and other social costs, but no revenue.
Read more about this topic: Excess Burden Of Taxation
Famous quotes containing the words deliberate and/or distortion:
“Simile and Metaphor differ only in degree of stylistic refinement. The Simile, in which a comparison is made directly between two objects, belongs to an earlier stage of literary expression; it is the deliberate elaboration of a correspondence, often pursued for its own sake. But a Metaphor is the swift illumination of an equivalence. Two images, or an idea and an image, stand equal and opposite; clash together and respond significantly, surprising the reader with a sudden light.”
—Sir Herbert Read (1893–1968)
“It is not enough for theory to describe and analyse, it must itself be an event in the universe it describes. In order to do this theory must partake of and become the acceleration of this logic. It must tear itself from all referents and take pride only in the future. Theory must operate on time at the cost of a deliberate distortion of present reality.”
—Jean Baudrillard (b. 1929)