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:
“In philosophy if you aren’t moving at a snail’s pace you aren’t moving at all.”
—Iris Murdoch (b. 1919)
“The literature of the poor, the feelings of the child, the philosophy of the street, the meaning of household life, are the topics of the time. It is a great stride. It is a sign,—is it not? of new vigor, when the extremities are made active, when currents of warm life run into the hands and the feet.”
—Ralph Waldo Emerson (1803–1882)
“People who love soft methods and hate iniquity forget this,—that reform consists in taking a bone from a dog. Philosophy will not do it.”
—John Jay Chapman (1862–1933)