Federal Government And Tax Policy - 1324 Words

When the American government formed and broke away from the British, there was a struggle between government interventions in the lives of its citizens. The federal government had limited power, and states wanted to maintain their rights. Over time as major wars broke out, infrastructure was needed, and other federal expenditures expanded, there was a need for a more powerful federal government. To raise revenues for expenditures, the federal government needed to tax the people. Now, tax policy is a major motivator of the actions of individuals, and the government has used the tax code to alter economy and societal behavior. Policy makers have used the tax code to alter the distribution of income and alter behavior when working, investing, saving, and consuming resources (Steuerle; Pg. 2). A few of the policies deal with tax preferences, enactments, vouchers, and tax cuts. Tax preferences have had a significant impact on society’s behavior and the economy because individuals want these preferences, and many individuals and entities aim to achieve the lowest tax payment as possible. Tax preferences use exclusions, exemptions, deductions, credits, and tax rates to lower the tax liability for individuals or corporations (Ippolito; Pg. 269) Preferences include the mortgage interest deduction, health insurance exclusion, lower tax rate for capital gains, etc. From the perspective of corporations, despite the high corporate tax rate, there are a variety of tax preferences thatShow MoreRelatedFiscal Policy On Employment, Potential Gdp, And The Economic Growth Rate935 Words   |  4 PagesParkin, chapter sixteen is titled Fiscal Policy. There are three objects for the chapter. The first object is to be able to â€Å"describe the federal budget process and the history of tax revenues, outlays, deficits, and debts†. The second object is to â₠¬Å"explain how fiscal stimulus is used to fight a recession†. The third objective is to â€Å"explain the supply-side effects of fiscal policy on employment, potential GDP, and the economic growth rate†. The federal budget has two main reasons it was createdRead MoreDifference Between Fiscal And Monetary Policy Essay1345 Words   |  6 PagesThere are many policies that are enacted continuously that stimulate the economy in the United States. Some of these policies stimulate the U.S. economy in a negative way and some stimulate it in a positive way. One would agree that the U.S. economy is forever changing due to various factors. Some of these economic policies are also developed due to various factors or events that may have occurred in the United States. 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