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:
“The great critic ... must be a philosopher, for from philosophy he will learn serenity, impartiality, and the transitoriness of human things.”
—W. Somerset Maugham (1874–1965)
“One of the main things that interfere with our joy is the belief that if we try hard enough, read the right books, follow the right advice, and buy the right things, we could be perfect parents. If we are good enough as parents, our children will be perfect too.... Unfortunately, what comes from trying to live out this philosophy is not perfect children but worried parents.”
—Lawrence Kutner (20th century)
“I would love to meet a philosopher like Nietzsche on a train or boat and to talk with him all night. Incidentally, I don’t consider his philosophy long-lived. It is not so much persuasive as full of bravura.”
—Anton Pavlovich Chekhov (1860–1904)