Nov 30, DEC 2

Nov 30, DEC 2 - Taxation and Economic policy 1. Basic...

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Taxation and Economic policy 1. Basic Models for organizing an economy a. Socialists – mostly control, monopolies b. Mixed economies – good deal of government intervention, the balance is starting to even out for government involvement across the globe 2. Fiscal and monetary policy a. Fiscal is the use of government spending in combination with tax policy for the purpose of influencing the overall performance of the national economy b. Monetary policy is the use of government’s ability to control the supply and availability of money for the purpose of influencing the overall performance of the national economy. c. Techniques of monetary control c.i. 2 Principal techniques c.i.1. Reserve requirements – the reserve member banks must maintain against their deposits in Federal Reserve Banks c.i.2. Discount Rate – the interest rate at which the Federal reserve lends money to commercial banks 3. Tax policy a. Consumption versus income a.i. Increase consumption tax will increase savings a.ii. Should the use of money or the acquisition of money be taxed? b. Vertical (Progressive, flat, and regressive) b.i. Regressive – those with less income pay a higher percentage than those with a higher income b.ii. Progressive – is generally the first bit of income is not taxed, next at a low rate, next a bit higher, next even more higher, then a cap rate b.iii. Ex. 0% on first $10,000 10% between $10,001 and 20,000 20% between 20,001 and 60,000 40% on income over $60,000 b.iv. Means that only as you make more do you pay taxes on that money b.v. What is the fairest system? c.
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This note was uploaded on 11/27/2011 for the course POLI 100 taught by Professor Rabinowitz during the Fall '07 term at UNC.

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Nov 30, DEC 2 - Taxation and Economic policy 1. Basic...

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