US Public Financial and Fiscal Policies

People do not enjoy talking about taxes because they are too political, confusing, and depressing. It is no secret that the American tax code is a mess and something many economists describe as too broken to fix. Despite this, politicians have never stopped from trying to “fix” the code, yet they have had very little success. The U.S. Government’s tax code currently comprises “more than 67,000 pages of complexities” (Boortz, Linder, & Woodall 14). The Americans for Fair Taxation (AFFT) was founded in 1995 with one goal: create the simplest and best tax reform plan that would work in the modern market and economy. The AFFT’s best solution was a bill which they promptly called the FairTax.

There is no doubt that wealth inequality in America has been escalating quickly; the portion of total income earned by the top one percent has doubled since the beginning of the 1970’s. The wealthy are the main beneficiaries

Given the critical circumstances the United States economy faces today, the current fiscal policy, in addition to the changes that will be made in the future, is under intense scrutiny. During the Obama administration, which will soon come to an end in about six months, a variety of policies were created in attempts to create employment, raise our GDP, and boost the state of the economy, among other ideas. The fiscal policies created by Congress and the President demonstrate success in some areas, while failing in other areas, as many, including myself, would argue. As the 2016 election quickly approaches, it is important to remember previous fiscal mistakes and successes, and the current economy, in order to better grasp what will be necessary for a successful fiscal policy in the future.

Nationwide government officials often wonder how this country is going to overcome unemployment, and the common misconception is through the provision of low wage jobs. By providing people with some source of income, congress believes millions will no longer depend on government aid. In actuality, however, providing minimum wage work is not going to solve such a drastic problem now, in the future, or at all for that matter. Minimum wage ($5.15), while serving at the socially acceptable pay standard, does not even compare with the nationwide ?living wage? of $10.18 (Ramisch). It is becoming increasingly more difficult to survive on such tragic wages, yet there is often little debate because it is money, and every little bit matters when it comes to paying bills.

Within the United States, there is an unequal collection and distribution of resources. The current unequal or socially unjust tax system is a direct contrast to the social justice theories of John Rawls. The taxation discrepancy has ramifications on many important aspects of our society, such as health care, employment, old age security, and education. These issues affect everyone in our society, regardless of age, race, gender, or sexual orientation. Thorough more equal taxation, we have the potential to create a more society as a whole.

The following memorandum is a direct response to Robert Reich’s book Aftershock: The Next Economy and America’s Future (2013). It includes an overview of Reich’s diagnosis of the economic issues facing America, as well as relevant analysis for consideration by the President and Congress. The following text considers a potential prescription for the issue of income equality and a prediction regarding the potential action or inaction of the United States government on these issues.

This paper researches and reviews the widening income gap in modern America, going into detail about the activist and non-activist viewpoints on this issue. Discussed is the impact it has on the economy, and the overall wellbeing of the country. Politicians of the political left and right’s opinions and actions they have taken are also touched upon, since it is a hot issue in the 2016 presidential election. Included is an in depth explanation of income inequality, and how it effects the American economy and the country as a whole.

The George W. Bush administration is remarkably renowned for passing a major tax-cuts package, known as the Economic Growth and Tax Relief Reconciliation Act of 2001, (Bartels, 2005, p. 19). The package postulated a reduction in the federal income tax rates, increment in the child credits, augmented tax-free retirement contributions and the educational savings account, as well as a gradual elimination of the US estate tax. The entire tax package was to cost the US Treasury over $1.3 trillion (excluding interest) up to 2010, the expected expiry time of the package. If the system was to continue in the later years, the Treasury could end up spending over $200 billion each year. According to Bartels (2005), The Bush move was supported by the ordinary citizens before the passage of the package. The people’s support was not meant to imply the way they were impressed with the package as contributing to inequality, as they were mainly concerned with their own individual welfare. Notably, they wanted a system that could relieve them from paying massive or burdensome amounts of taxes. Though contrary to the perception of the legislation by the people and their personal preferences regarding it, 36% of the tax benefits were to accrue to the richest, who comprised only one percent of the American population. The share was almost equal to the one that was received by those in the bottom who constituted around 80% of the population (Hacker & Pierson, p. 33).

Benjamin Franklin once said, “in this world nothing can be said to be certain, except death and taxes.” Taxation has always been a hot-button issue in the United States, as it was one of the primary reasons the United States revolted from the British. The media have once again turned its attention to the issue of taxation, but primarily on the increasing of taxes solely on upper-class citizens. The United States currently employs a progressive tax rate, which means that the upper class already is liable for a higher percentage of taxes. During the current presidential campaign, each of the candidates has their own unique idea of tax reform. Some of the candidates’ tax plans cut taxes for all through the change to a flat tax rate, while other plans do quite the contrary and raise taxes for all. The candidates who are favoring the increase of taxes on the wealthy are attempting to enact laws, which increase funding for government programs, attempt to redistribute the wealth to the lower class, and eliminate the debt of the United States. However, the candidates who are attempting to enact a flat tax rate are attempting to eliminate outdated government programs and to help to increase jobs. A higher tax rate on the wealthy through a progressive tax system, at a cursory glance, may appear to be beneficial, however, I am arguing to show the negative effects not only for the wealthy but the United States economy as a whole.

Recession is a term that looms over any society at some point or another but what does recession mean for the economy, in short it is an economic decline. This essay will examine the meaning of recession and will discuss the fiscal and monetary policies that are used to pull economies out of recessions. The great Recession of 2008 will shed light on how these policies were successful at restoring economic growth and reducing unemployment.

Wouldn't it be a perfect world if everyone paid their fair share of taxes? Shouldn’t everyone have skin in the game? For example, if the tax rate was 10%, then the person earning $10,000 per year would pay $1,000 in taxes, and the person earning $100,000 per year would pay $10,000 in taxes. Does this sound too good to be true? Many complain that our current tax system is broken and there has to be a better tax system. During this last presidential campaign, the idea of a flat tax system was once again discussed as an option by one of the candidates. Over the years, many bills have been introduced to congress to change our tax system. Right now, Congress is debating on a new tax system. Our President is pushing for change as he realizes the current system is not going to get the deficit down. We may not see significant change this term, but it will be interesting to see how it all turns out. This paper will discuss what is wrong with our current system, the possible solution of adopting a flat tax system, the counter evidence of why a flat tax system is probably not the solution to our tax problem and why this evidence is right. Our current system is very complex, not efficient, biased, and basically not effective. Did you know the current tax code has over 9 million words? (books.google.com) (241 words) It’s no wonder people want change. I think most would agree our current tax system needs revised. We hear on the news how big corporations pay little in

For any economy, fiscal policy has two primary goals, an economic goal and a social goal. Regarding the economic goal, fiscal policy has to ensure suitable and sustainable economic growth rates that maintain unemployment rate at its natural level and at the same time do not generate inflationary pressures. At social level, on the other hand, fiscal policy has to ensure a degree of equity regarding the distribution of incomes in the economy, and to direct considerable part of available resources toward essential investments that provide necessary goods and services consumed mainly by the vast majority of population.

China’s economy has been declining and economy analysts expect the world’s second largest economy to further decline. The council has commented regarding the economic situation that China “needs more active fiscal policy” (CNBC) in order to have its economy back on the reasonable range. Fiscal policy affects aggregate demand depending on the government’s spending and taxation. Thus, if the government decides to make changes in its taxation such as discounting corporate taxes, the aggregate demand curve will shift. In addition to that, money spent on public services and welfares will increase government spending which will affect aggregate demand as well.

Income tax is the largest source of governmental revenue in the U.S., representing approximately 43% of its total annual earnings (Cloutier). The current tax policy is a complex, graduated, multiple-rate tax structure that imposes increasingly higher tax rates on income, as that income rises (Teller). To offset that rate increase, numerous deductions, exemptions and loopholes have been devised. There are several elements of the current tax code that incentivize certain types of economic activity, much of which is then exposed to at least double taxation, such as capital gains and inheritance taxes. The system is convoluted, includes over 10,000 pages of code, and employs tens of thousands of people, including, but not limited to attorneys, lobbyists, tax officials, tax preparers and tax planners who are often paid by, and work only to further benefit the economic interests of the highest paid citizens (Hall, R., & Rabushka, A.). With possibly only

1. What are the three major categories of revenues for the federal government? Please comment on each and indicate their relative importance to each other. Relative importance can be indicated by dollar amounts, percent of total revenue or expenditure or, though less informative, by ranking.