Nov 30 - Increase consumption tax will increase savings b....

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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.
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Unformatted text preview: Increase consumption tax will increase savings 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 c. Horizontal (loopholes, policy based initiatives) d. Estate of death taxes d.i. When people die, should what they leave behind be taxed, and at what rate? d.ii. Should Heir deserve the moneys or profits 4. Major Sources of revenue and major expenditures 5. The budget process 6. Types of policy: Distributive, redistributive, and regulatory 7. The policy process 8. Iron Triangles and issue networks 9. Current account balances...
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