Question

Discuss a Fiscal Policy and how it impacts you as an individual (Recent Stimulus Bills, Income Taxes, Excise Taxes or any other law, regulation or standard. Be aware Monetary Policy is NOT a Fiscal Policy.

can some write a discussion about this topic, please

Answer 1

Fiscal policies are those which are enacted and changed by the government which majorly involves changing the government spending in the economy or changing the tax rates. Let us consider one of the most important taxes, the income tax. An income tax is a proportion of the income that you have to pay as taxes to the government. Since, the tax is progressive, the higher the income, the higher is the tax and thus it affects you as an individual directly. Suppose your income is $100000 and the current income tax rate for your income is 30%, then you pay $3000 as taxes and are left with $70000 for personal use. But now if the government decides to increase the tax rate to 50%, you pay $50000 as taxes and are left with a reduced amount of $50000 for personal use. The long term implications can be different as the government may use the tax money to finance a new investment project which generates a lot of income in the economy and increases you pre-tax income in the future.