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Principles of Macroeconomics Unit 6

This is an outline of the concepts discussed in the Principles of Macroeconomics online text at www.inflateyourmind.com

John Bouman

on 26 April 2017

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Transcript of Principles of Macroeconomics Unit 6

Fiscal Policy
Federal Government
(Congress, White House)
State Governments
Local (County
and Municipalities)
Then click on "Historical Tables"
Overall spending and receipts:
Table 1.1
Table 2.1 gives
revenue by source
Spending by function:
Table 3.1
Spending components
(more detailed):
Table 3.2
Total government expenditures
(includes state and local spending):
Table 15.2
Total government receipts
(includes state and local spending):
Table 15.1
Click on State & Local
Government Finance
Summary Report
Federal Tax Rates
The Burden of Tax
Alternative Tax Systems
The Laffer Curve
Estimated Tax Rates for Average U.S. Household (Taxable Income of Approximately $65,000)
Public Choice
Click on Tax Table.
At the bottom are the marginal tax rates.
Government tax revenue decreases at higher tax rates
Spending and receipts as a percentage of U.S. nominal GDP:
Table 1.2
Federal Individual Income
State and County Individual Income
Social Security and Medicare
10 - 15%
Sales, Excise, Property, Entertainment, Import, Estate, Gift, Capital Gains, Savings, Corporate, Self-Employment, etc.
10 people share a $100 bill at a restaurant. Who pays which share?
Wealthiest person: $70 Next four wealthiest: $28 Poorest five: $2
What happens if the wealthiest person moves away?
Flat Tax
Consumption Tax
Same rate for everyone (lower incomes exempt)

Tax on consumption only
(essential products exempt)


Encourages saving

Even drug dealers pay
Politicians tend to:
Overspend (feeling of power, and it's not their money)
Look at the short run (election coming up)
Cater to special interest groups (more votes and money)
Governments tend to:
Waste spending (end of budget year spending)
Regulation agencies tend to employ people who have worked in the industry (Capture Theory)
What does the average taxpayer in the U.S. pay in taxes?
37.15 - 42.15%
Herman Cain, 2012
Presidential Candidate
Full transcript