Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Term Paper:
Public choice theorists focus on the question of what government policies are likely to be implemented in a given political setting, rather than what policies would produce a desirable outcome if they were implemented. The conclusions of the public choice theory tend to increase skepticism towards the prospect that giving government power over various areas of human affairs will actually have beneficial results, regardless of the democratic control exercised by the citizens.
One of the basic insights that underlie the public choice theory is that good government policies in a democracy are an underprovided public good, because of the rational ignorance of the voters. Each voter is faced with an infinitesimally small probability that his vote will change the result of the elections, while gathering the relevant information necessary for a well-informed voting decision requires substantial time and effort. Therefore, the rational decision for each voter is to be generally ignorant of politics and perhaps even abstain from voting. The fact that most citizens in modern democracies display gross ignorance of politics is well attested by research, while the elections in modern democracies are usually marked by a low voter turnout.
While its main intent is to provide revenue for the federal government, the tax code is frequently used to direct the behavior of businesses and individuals in an attempt to achieve social, economic, and political goals
For example, the tax law provides a deduction for mortgage interest in order to encourage home ownership. A theoretically pure income tax would not allow this deduction, which is not an expense incurred for the production of income. The allowance of the mortgage interest deduction is seen by some as discrimination against taxpayers who rent, rather than own, their home: the payment of rent for one's home is not deductible. Of course in theory, landlords generate tax savings on their mortgage interest payments, and pass these savings on to renters.
Because the government uses the tax code as an instrument of social policy, the code as a whole appears to lack a coherent organizing principle. This lack of a coherent organizing principle has become magnified over time, due to the interplay between successive legislative amendments and regulatory changes to the law and the private sector responses to those amendments and changes. For instance, suppose that Congress enacts a tax credit to encourage a particular type of activity. In response, a group of taxpayers who are not the intended beneficiaries of the credit re-order their affairs, or the superficial aspects of their affairs, to qualify for the credit. Congress responds by amending the code to add restrictions and target the credit more effectively. Certain taxpayers manage to use this change to claim additional benefits, so Congress acts again, and so on. The result is a feedback loop of enactment and response, which, over an extended period of time, produces significant complexity.
The U.S. government rewards certain behavior with tax deductions or tax credits. The most famous reduction in taxes is that income used to pay mortgage interest on a personal home is exempted from taxes, if the taxpayer elects to itemize. Taxpayers who do not participate in an employer-sponsored pension plan may contribute up to $3,000 ($3,500 if age 50 or above) into an individual retirement account, and deduct that contribution from their gross income. The Earned Income Tax Credit benefits low- to moderate-income working families.
In general, the U.S. income tax is highly progressive, at least with respect to individuals that earn wage income. As of 2001, the top one percent of individual taxpayers paid approximately 23% of all federal taxes. The top five percent paid approximately 39%, and the top 10% paid 50% of all federal taxes. The bottom 20% of taxpayers paid a little over one percent of all federal taxes. Moreover, the progressivity of the U.S. tax system has gradually increased over recent decades. The top 20% of taxpayers paid approximately 56% of all taxes in 1980, and this figure gradually has risen to 65%, as of 2001. In recent years, however, a reduction in the tax rates applicable to capital gains has significantly reduced the income tax burden on non-wage income.…[continue]
"Interest Rates Welfare Economics Public" (2005, June 16) Retrieved October 26, 2016, from http://www.paperdue.com/essay/interest-rates-welfare-economics-public-63933
"Interest Rates Welfare Economics Public" 16 June 2005. Web.26 October. 2016. <http://www.paperdue.com/essay/interest-rates-welfare-economics-public-63933>
"Interest Rates Welfare Economics Public", 16 June 2005, Accessed.26 October. 2016, http://www.paperdue.com/essay/interest-rates-welfare-economics-public-63933
Economics The Keynesian economic theorists follow an economic model that considers three factors in macroeconomic growth. These are income distribution, savings, and investment functions. These factors are derived from the theory's determination of equilibrium in the economy as determined by the relationship between employment, prices, and gross-domestic-product (Padalkina 18). The theory suggests that the economy does not have full employment, autonomous demand-component affect rate of growth, and investment decisions are not
Economic Policy and the National Debt Ironically, when governments overspend they typically find ways to refund or restructure debt -- when individuals or corporations within those countries do the same, the consequences are quite different. Money means more than one thing -- usually an object that is traded for payment of goods or services, of exchange. However, when we talk about the government, there is a huge different in the way
Economic Events and Economic Models A Micro-Economic Event An Analysis of the Motivations behind Kroes' Proposals Price Controls: Dissenting Views A Macro Economic Event Probable Causes of Inflation Probable Effects of the Increasing Inflation Proposed Remedies Economic events take place around us on a daily basis. An economic event could be a move by the government to stem inflation by regulating interest rates or even the imposition of price controls by relevant agencies in regard to certain products
Public Administration Budgeting PA Budgeting Budgeting for Public Administration Budgets are used in addressing various purposes including management and control as well as communication of goals, successes, the public entity's philosophy and explain the various departmental functions. Public administration professionals must be able to analyze the financial health of an entity by examining the budget. This work will assess how well available budget documents and auxiliary information address each of these functions on
Economic Challenges Canada Faces In recent years, the challenging economic condition in Canada has emerged as a concern for citizens, policy makers and the government alike. Canada faces challenges in terms of creating a more innovative society, as the country continues to experience a significant productivity gap compared to other advanced industrial economies. The Canadian industry appears to be slower in successfully developing, applying and marketing innovative products, processes and services
Recession is a period characterized by increased unemployment rate, lower inflation, lower spending, reduced production and stocking. Different economic theories such as the Classical, Neo-classical, Keynesian and the Growth curve and life cycle theories argue differently about the economic cycles. The neo-classical theorists for example argue that interest rates are crucial in the shift towards the different cycles and therefore by regulating the flow of funds (increasing or decreasing)
Since G=T with a balanced budget, savings will still fall until I's again, but the expansion of government achieves the goal of replacing the shortfall in aggregate expenditures, albeit with new, higher taxes. In our case, the increased proceeds from taxes will have to amount to $30 million, in order to set-off the increase in government spending and to maintain the same GDP. The increase in government expenditures will fully