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:
“If this is philosophy it is at any rate a philosophy that is not in its right mind.”
—G.C. (Georg Christoph)
“You may decry some of these scruples and protest that there are more things in heaven and earth than are dreamt of in my philosophy. I am concerned, rather, that there should not be more things dreamt of in my philosophy than there are in heaven or earth.”
—Nelson Goodman (b. 1906)
“Philosophy aims at the logical clarification of thoughts. Philosophy is not a body of doctrine but an activity. A philosophical work consists essentially of elucidations.”
—Ludwig Wittgenstein (1889–1951)