Thus, in addition to anchoring the monetary regime, stabilization requires eliminating the budget deficit through fiscal reform in which explicit taxes
are substituted for the inflation tax and expenditures are brought into line with expected revenue.
in applying the pre-tax profit test as a particular
. Everyone is familiar with any number of pecuniary taxes; governments both within and outside the United States impose explicit pecuniary taxes in hundreds if not thousands of ways.
If a single woman leaves welfare to take a job, the combination of explicit taxes
and lost benefits will yield marginal tax rates approaching 80 percent--an affront to those serious about working their way to a better life.
Maydew (2001) defines tax capitalization "as the effect of taxes on prices when current prices are lower than they otherwise would be because of future explicit taxes
on those assets." Maydew (2001) links tax capitalization to the Scholes et al.
There are no explicit taxes
, so these are also nominal prices paid by consumers.
Where, [bar.Y], [bar.W] and S are already defined; T stands for all types of implicit and explicit taxes
; Z for all types of subsidies; I for inequalities in wealth and income distribution within an economy; and IN for all other intersectoral inequalities such as in the allocation of subsidies, development expenditure and credit, in terms of trade, and even in protection of life, property and honour.
Taxpayers taxable at different rates will pay explicit taxes at different amounts and rates.
Those prices are before explicit taxes, but they are after implicit taxes.
If explicit taxes
are ignored, then this ratio will be less than 1, consistent with USOs being less desirable investments, and one would expect banks to hold less of them.
Thus, rather than being "mainly concerned with explicit taxes," policy makers should "also consider implicit taxes to provide a complete picture of the total tax burden" (C&W 1999, 2).
Under perfect competition, an increase in tax preferences, leading to a decrease in pre-tax return, will give rise to an increased implicit tax, sufficient to offset the reduction in explicit taxes. Under less-than-perfectly competitive market structures, this offset will be less than perfect: firms will retain some of the explicit tax savings for themselves.