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 Settlement House] must be grounded in a philosophy whose foundation is on the solidarity of the human race, a philosophy which will not waver when the race happens to be represented by a drunken woman or an idiot boy.”
—Jane Addams (1860–1935)
“Art requires philosophy, just as philosophy requires art. Otherwise, what would become of beauty?”
—Paul Gauguin (1848–1903)
“There is a constant in the average American imagination and taste, for which the past must be preserved and celebrated in full-scale authentic copy; a philosophy of immortality as duplication. It dominates the relation with the self, with the past, not infrequently with the present, always with History and, even, with the European tradition.”
—Umberto Eco (b. 1932)