y. For our function this is the partial derivative as used in equation (29.1). However, the tax function is better understood not as T[y] but as the multivariate T[y, q] with q the (now arbitrary) tax parameters. Agents will tend to take account of parameter changes. So optimisation remains our paradigm - and it results into marginal rates - but the better marginal rate is the total derivative, [98] or dynamic marginal rate (DMR):
dT[y, q]
T[y, q]
T[y, q]
----------- = ------------ + ------------ dq / dy
dy
y