Public Finance
Philosophy of public finance
All states must raise some sort of revenue to pay for the basic services it must offer to protect its citizens and provide them with needed services. The degree to which the state should act in such a supportive fashion may vary depending on the perspective of the individual but the notion that some state financing is needed for a nation to be functional is difficult to debate. Taxation is one of the primary methods through which the state extracts revenue. Although there are many different competing philosophies about the purpose of government financing, most would agree that the government can serve as an engine of growth if it allocates its assets in an appropriate manner.
One of the most influential texts defining a philosophy of public financing was that of Richard Musgrave's The Theory of Public Finance. Musgrave's (1959) text stressed that "normative goals of efficiency, equity and stable economic growth" should be the main purpose of government financing (Bartle, Scott, & Shields 2008: 3). Other theorists such as public choice theorists "denies the viewpoint that government is a benevolent despot that will act to correct market failures and make distributional judgments in an even-handed way" and reflect a distrust in the ability of the government to make rational choices about allocation (Bartle, Scott, & Shields 2008: 3). They stress the need to allow...
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