Philosophy
Policymakers debate the nature of the tax structure they plan to implement (i.e., how progressive or regressive) and how they might affect individuals and businesses (i.e., tax incidence).
The reason for such foitution (??? substitution?) effect, because anything that does not change relative prices is nondistortionary. One must also consider the income effect, which for tax policy purposes often needs to be assumed to cancel out in the aggregate. The efficiency loss is depicted on the demand curve and supply curve diagrams as the area inside Harberger's Triangle.
National Insurance in the United Kingdom and Social Security in the United States are forms of social welfare funded outside their national income tax systems, paid for through worker contributions, something labeled a stealth tax by critics.
Read more about this topic: Tax Policy
Famous quotes containing the word philosophy:
“What does mysticism really mean? It means the way to attain knowledge. It’s close to philosophy, except in philosophy you go horizontally while in mysticism you go vertically.”
—Elie Wiesel (b. 1928)
“I am still a learner, not a teacher, feeding somewhat omnivorously, browsing both stalk and leaves; but I shall perhaps be enabled to speak with more precision and authority by and by,—if philosophy and sentiment are not buried under a multitude of details.”
—Henry David Thoreau (1817–1862)
“The result of civilization, at the Sandwich Islands and elsewhere, is found productive to the civilizers, destructive to the civilizees. It is said to be compensation—a very philosophical word; but it appears to be very much on the principle of the old game, “You lose, I win”: good philosophy for the winner.”
—Herman Melville (1819–1891)