The fiscal policy paper

The fiscal policy paper - F iscal Solutions 1 Running Head:...

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Fiscal Solutions 1 Running Head: Fiscal Solutions Fiscal Solutions Todd Morrow ECN201
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Fiscal Solutions 2 The fiscal policy that the United States is currently employing is not sustainable. With the increases on government spending over the last years, the national debt of the country has grown astronomically. There are two possible solutions to this problem. Completely reorganize the tax system of the United States to a flat tax system, where everyone pays their way, and dramatically cut back on income security spending. The idea of a flat tax system is not a new one. In fact many countries outside of the US have adopted the system of taxation with great success. Some of these countries, located in Eastern Europe and Asia experienced an increase in tax revenues as high as 20% in the first year of the flat tax being implemented. (Rabushka 2004) The United States took in roughly $400 billion in tax revenues in 2008 which was a drop of nearly 38% from the previous year. This drop, coupled with a huge increase in government spending led the Congressional Budget Office to predict a $1.7 trillion deficit for fiscal year 2009. The outlook does not get any brighter either. A report from an independent agency warns that, even with projected increases in tax revenue in fiscal year 2011, the federal deficit will more than likely double over the next ten years. (Waggoner 2009) When dealing with
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Fiscal Solutions 3 numbers that are well over $12 trillion currently (Hall 2009), doubling that number over such a short period is cause for alarm, and reform. Many say that such a drastic system change would be too great a shock to the
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This note was uploaded on 09/11/2010 for the course PHYS 123 taught by Professor Smith during the Spring '10 term at Acton School of Business.

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The fiscal policy paper - F iscal Solutions 1 Running Head:...

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