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)
“Mr. Alcott seems to have sat down for the winter. He has got Plato and other books to read. He is as large-featured and hospitable to traveling thoughts and thinkers as ever; but with the same Connecticut philosophy as ever, mingled with what is better. If he would only stand upright and toe the line!—though he were to put off several degrees of largeness, and put on a considerable degree of littleness. After all, I think we must call him particularly your man.”
—Henry David Thoreau (1817–1862)
“If this is philosophy it is at any rate a philosophy that is not in its right mind.”
—G.C. (Georg Christoph)