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.
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.
If only explicit taxes are considered, then a bank's state tax rate should not affect the amount of its USO holdings if, in taxing states, USOs are taxable like other investments.
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.
There are no explicit taxes
, so these are also nominal prices paid by consumers.
Taxpayers taxable at different rates will pay explicit taxes at different amounts and rates.
In this simple example, each taxpayer decides whether to hold municipal bonds or corporate bonds by trading off implicit and explicit taxes.
Those prices are before explicit taxes, but they are after implicit taxes.
One of the points emphasized by Myron Scholes, Mark Wolfson, and their co-authors in their tax planning textbook, Taxes and Business Strategy, is that implicit taxes are real taxes, just as are explicit taxes.
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.
An application of the Scholes and Wolfson model to examine the relation between implicit and explicit taxes and firm market structure.