Taxes in America amount to about 30 percent of national
income or roughly $12,000 per man, woman, and child. Now,
that’s a lot of money that could otherwise be spent on privately
provided goods and services that people value and enjoy, so
it’s no surprise that Americans pay very close attention to
whether we are getting our money’s worth and whether our
own tax bill is too high
Another concern over raising taxes on high-income households is that it might influence decisions to start businesses. If
increased taxes reduce returns to investing in small business ventures, high-income individuals might be less likely to take
risks, and entrepreneurial activity might decline. Some studies conclude that higher taxes reduce entrepreneurship, but a
greater number conclude the opposite.
In this chapter you will get an overview of how the U.S. government raises and spends money, examine the efficiency costs of taxes, learn alternative ways to judge the equity of a tax system, see why studying tax incidence is crucial for evaluating tax equity, consider the tradeoff between efficiency and equity in the design of a tax system.
The United States Constitution established the world’s first federal
system encompassing an economic union and a political union
whose central characteristic is dual sovereignty with Congress possess-
ing delegated powers and states possessing reserved or residual powers.
A federal system automatically raises questions pertaining to the nature
of appropriate relations between the national government and state gov-
ernments at the boundary lines of their respective authority and between
sister states each possessing equal powers.
Many countries are likely to have to raise taxes as part of fiscal consolidation over the next few
years, but how is this best done – by broadening the tax base or raising tax rates? This study is
intended to provide economic analysis that helps answer such questions.
As the OECD Secretary-General remarked at the G20 Summit held last June in Toronto, fiscal
consolidation should be as growth-friendly as possible. In general tax base-broadening reforms are
identified as growth-oriented reforms.
A final way banks raise funds in the money market is through repurchase agreements (RPs). An RP is a
sale of securities with a simultaneous agreement by the seller to repurchase them at a later date. (For the
lender—that is, the buyer of the securities in such a transaction—the agreement is often called a reverse
RP.) In effect this agreement (when properly executed) is a short-term collateralized loan. Most RPs involve
U.S. government securities or securities issued by government-sponsored enterprises. Banks are active
participants on the borrowing side of the RP market. ...
In our experiments, 42 MICAz nodes were used.
The experimentswere conductedwith multiple randomly
generated layouts under two different scenarios: (i) an
open parking lot, and (ii) an indoor ofﬁce. In each sce-
nario, two types of experiments were conducted: Fixed
Single Sender and Round Robin Sender. In the Fixed
Single Sender experiment, the sender was placed in the
center of the topology, while the other 41 nodes were
randomly deployed as receivers. The sender broadcasted
a packet in every 200ms. Each packet was identiﬁed by
a sequence number.
The case-studies marked an increasingly complex
aid environment, with new stakeholders and
partnerships for development, and a number
of mechanisms seeking to coordinate donor
contributions in sectoral and national planning
processes. In addition to the sector-wide
approaches and poverty-reduction strategy papers
that were the focus of country office engagement in
2005, there is an increasing emphasis on reporting
and strategizing in order to achieve the Millennium
Development Goals (MDGs), in particular MDGs
4, 5A and 5B.
It has often proven valuable to have the proposed audit task plan reviewed by an experienced
auditor who is outside the audit team. Such reviews may raise issues that were not
considered by the originator of the plan and that suggest the need to modify the plan in
material ways. In an “audit office” with a hierarchical structure, such a review is typically
required by office policy and is usually carried out in two stages by supervisory levels above
that of audit team leader. In a more decentralised SAI, such as some “courts...
Raising capital gains taxes will lower the return on some types of assets, and could decrease investment. If investors decrease
stock holdings, and businesses rely on financing from in-state investors, then a state’s economy could grow more slowly. But
a debate on capital gains taxes in the 1980s and 1990s inspired a considerable body of research, which ultimately found that
these taxes have little impact on long-term investment.
Income tax rates are at the center of many recent policy debates over taxes. Some policymakers
argue that raising tax rates, especially on higher income taxpayers, to increase tax revenues is part
of the solution for long-term debt reduction. For example, in the 112th
Congress the Senate passed
the Middle Class Tax Cut (S. 3412), which would allow the 2001 and 2003 Bush-era tax cuts to
expire for taxpayers with income over $250,000 ($200,000 for single taxpayers). Other
policymakers argue that maintaining low tax rates is necessary to foster economic growth.
Income tax rates are at the center of many recent policy debates over taxes. On the one hand,
some argue that raising tax rates, especially on higher income taxpayers, to increase tax revenues
is part of the solution for long-term debt reduction. For example, in the 112th
Congress the Senate
passed the Middle Class Tax Cut Act (S. 3412), which would allow the 2001 and 2003 Bush-era
tax cuts to expire for taxpayers with income over $250,000 ($200,000 for single taxpayers).
the other hand, others argue that maintaining low tax rates is necessary to foster economic
Very low interest rates in major currencies have raised concerns over international credit
flows to robustly growing economies in Asia. This paper examines three components of
international credit and highlights several of the policy challenges that arise in constraining
such credit. Our empirical findings suggest that international credit enables domestic credit
booms in emerging markets. Furthermore, we demonstrate that higher levels of international
credit on the eve of a crisis are associated with larger subsequent contractions in overall
credit and real output.
I have laid out a detailed plan in my Budget to restrain spending, cut earmarks, and balance the budget by 2012 without raising taxes. Second, we must trust Americans with the responsibility of homeownership and empower them to weather turbulent times in the market. My Administration has acted aggressively to help credit-worthy homeowners avoid foreclosure. We launched a new initiative called FHASecure to help families refinance their homes. I signed legislation to protect families from
The wealthy now have more disposable income than at
any time in history. Proponents of raising taxes on affluent
households to fund services suggest that these households
should pay higher taxes now because they have benefitted so
much from tax cuts in recent years.
Taxing high incomes to pay for state services may also be one
of the best approaches available to states to limit economic
harm in a high unemployment, slow-growth environment.
Also, since most job holders do useful work, job creation is tied to wealth creation—for
the simple reason that when more people are put to work, more work gets done. This
point requires a bit of explaining, as an exception comes to mind right away. Certainly it
is possible for a given company to get more work done without adding jobs, or even
while eliminating jobs. That is called raising productivity, and we as a society are
constantly coming up with ways to raise productivity.
For instance, this paper you are reading did not need to be...
This is important for two reasons. First, insofar as trade is driving GDP, it will not be negatively
impacted by a fiscal adjustment. The demand from outside of the country will not be reduced by a
country’s decision to raise taxes or cut spending. The second reason it is important is that the fiscal
adjustment can actually boost trade. A lower deficit can lead to a decline in interest rates, which can
in turn be expected to lead to a lower value for the country’s currency relative to that of its trading
This raises the final important...
In this chapter, we will explore the advantages and disadvantages of the various alternative forms of business organization. Next, we will look at the tax environment in order to gain a basic understanding of how tax implications may impact various financial decisions. Finally, we investigate the financial system and the everchanging environment in which capital is raised.
In the fall of 1929, the market value of all shares listed on the New York Stock Exchange fell by
30 percent. Many analysts then and now take the view that stocks were then overvalued and the stock
market was in need of a correction. Irving Fisher argued that the fundamentals were strong and the stock
market was undervalued. In this paper, we estimate the fundamental value of corporate equity in 1929
using data on stocks of productive capital and tax rates as in McGrattan and Prescott (2000, 2001) and
compare it to actual stock valuations. We find that the stock market in 1929 did...
Monetary policy in advanced economies, implemented through very low interest rates and
large-scale asset purchases, has led to concerns in emerging markets about a surge in
global liquidity. The main worry is that monetary ease in the major currencies could amplify
capital flows into emerging market economies when risk is “on” and capital outflows when
risk is “off”. Concerns arise about the risk that capital inflows might ease monetary conditions
or that outflows might destabilise the financial system.