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 purpose of a work of fiction is to appeal to the lingering after-effects in the reader’s mind as differing from, say, the purpose of oratory or philosophy which respectively leave people in a fighting or thoughtful mood.”
—F. Scott Fitzgerald (1896–1940)
“Every philosophy is tinged with the colouring of some secret imaginative background, which never emerges explicitly into its train of reasoning.”
—Alfred North Whitehead (1861–1947)
“I am still a learner, not a teacher, feeding somewhat omnivorously, browsing both stalk and leaves; but I shall perhaps be enabled to speak with more precision and authority by and by,—if philosophy and sentiment are not buried under a multitude of details.”
—Henry David Thoreau (1817–1862)