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:
“Philosophy of science without history of science is empty; history of science without philosophy of science is blind.”
—Imre Lakatos (1922–1974)
“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)
“A life-worshipper’s philosophy is comprehensive.... He is at one moment a positivist and at another a mystic: now haunted by the thought of death ... and now a Dionysian child of nature; now a pessimist and now, with a change of lover or liver or even the weather, an exuberant believer that God’s in his heaven and all’s right with the world.”
—Aldous Huxley (1894–1963)