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:
“It was fit that I should live on rice, mainly, who loved so well the philosophy of India.”
—Henry David Thoreau (1817–1862)
“The Scripture was written to shew unto men the kingdom of God; and to prepare their minds to become his obedient subjects; leaving the world, and the Philosophy thereof, to the disputation of men, for the exercising of their natural Reason.”
—Thomas Hobbes (1579–1688)
“All roads are blocked to a philosophy which reduces everything to the word “no.” To “no” there is only one answer and that is “yes.” Nihilism has no substance. There is no such thing as nothingness, and zero does not exist. Everything is something. Nothing is nothing. Man lives more by affirmation than by bread.”
—Victor Hugo (1802–1885)