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Fiscal Policy

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Roxanne Colvin

on 27 May 2013

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Transcript of Fiscal Policy

Pros Fiscal Policy Should taxes be raised
on the top 2%? The majority of citizens believe in further redistribution of the wealth. What is fiscal policy? Government use of spending and taxes to regulate our economy. Fiscal policy theories.... Supply-Side Economics: a laissez-faire mindset where fewer regulations and taxes stimulate the economy

Economic Planning: a socialistic mindset where government holds strict regulations and controls investments in the economy

Monetarism: a conservative mindset that government should only increase money predictably as productivity increases, otherwise hands off

Keynesian economics: government can influence macroeconomic productivity levels by increasing or decreasing tax levels and public spending. This supposedly curbs inflation , increases employment and maintains a healthy value of money. Brief History Overview of Debate Partisan Views on Raising taxes on the top 2%?! Democrats see them as millionaires that need to pay because they are capable. Obama sees them as a few who could pay more to reduce our national debt and guide us go back to tax legislation under the Clinton administration. Amendments and laws: The 16th amendment states that Congress has the power to levy income taxes, as the amendment exempted them from apportionment. Pollock V. Farmers Loan + Trust Co. Under Pollock vs. Farmers Loans and Trust, the Income Tax Act of 1894 was ruled as unconstitutional in a 5-4 decision since direct taxes, such as income and property tax, must be apportioned before they are enacted.
Pollock vs. Farmers’ Loans and Trust was replaced in 1913 by the 16th Amendment to the United States Constitution. 1894 What types of politics are at play? Income Tax was introduced to the United States under the Revenue Act of 1861, which was a flat tax of 3% on annual income over $800, and was needed to fund the Civil War.

The Revenue Act of 1862 then replaced the Act of 1861 the following year, with a graduated tax of 3-5% for annual income over $600. Today, that would equate to around $14,000. After the 16th amendment was passed, Congress allowed for a permanent income tax in 1913. Revenue Act of 1964 Signed by President Lyndon Johnson, it cut income tax rates by about 20%
It reduced the marginal rate from 91% to 70%
Following these tax cuts, unemployment fell from 5.2% to 4.5% Married: Individual: Republicans see them as businessmen who need their money to hire men and women because they are '"job creators" whose money, used privately, can stimulate the economy through investments, etc. Legislation under Obama's adminstration: A $787 billion economic stimulus package passed in March of 2009. This package combines government spending and tax cuts in a plan to provide consumer relief, encourage consumer spending, create employment, and stimulate business production. Fiscal policy... Congress altering expenditures through expansionary and contractionary methods in an attempt for stability.
Main committees involved include House and Senate Budget and Appropriation Committees along with the House Ways and Means Committee and Senate Finance Committee. Entrepreneurial: Everyone
should theoretically recieve tax
breaks but only the wealthy (top 2%) pay
increased rates. Cons Public Opinion The chance of the 98% being "hurt" Less employment and lower wages for
those who do business with the 2%. Raises Revenue: Businesses likely to cut jobs Provides greater infrastructure to
support job growth and consumer
culture. Irresponsible government spending More money in circulation for education, health care, social security, etc. Wealthy have money to spare Gov. can use taxes to relieve the poor. Rich alter their spending rates,
chance of gov. revenue decreasing. Less incentive for government to cut
spending Marginal rates get too high causing the
wealthy to invest in foreign business. Divides Americans causing social cleavages.
(Remember the civil war.) Expansionary fiscal policy is where government spending is higher than revenue. The desired effect is to restore the output of goods and services and put employees back to work.
Contractionary fiscal policy is when government decreases spending to slow down the economy and inflation. Gov increases
spending Currently, public sentiment approves Power of tycoons, such as Bill Gates,
should be contained Gov decreases
spending National Deficit Explained Revenue Act of 1986 Majoritarian: In general, equal income tax rates for all classes result in recieving the same benefits and consequences, discounting entitlement programs. The End Kelsie Gardner
Amanda Meadows
Kevin Cosnahan
Roxanne Colvin
Chris Lee This act served to simplify the tax code under the Reagan administration. It reduced the top tax rate from 50% to 28% and decreased the use of tax shelters (loopholes to generate tax deductions). Raising Taxes on the Wealthy Raising Taxes on the Wealthy
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