In: Economics
Discuss US fiscal policy. Including taxes, presidential candidate tax policies, real estate taxes, sales tax and value-added tax. Discuss how taxes play a role in US politics. How do these shape elections and Presidential campaigns?
The US fiscal policy is the policy
used by the government to manipulate the government spending and
the taxation structure so that the economy is on the path of growth
with price stability and employment level in the economy. Hence,
fiscal policy is used to influence the consumption and investment
behavior of the households and firms. In this regard, the
presidential candidates use taxation policies as an important topic
in their election campaign. For example, the Republican Party
candidates focus upon the reduction of taxes so that more
disposable income is available to spend to the consumers and less
burden will come to the government spending. Though, the Democratic
Party candidates focus to reduce the tax for low income people and
increase the tax for rich people to bring equality as well as
increase in aggregate demand. To pursue their philosophies, the
taxation system has major avenues such as real estate tax, sales
tax and value added tax. The real estate tax is applied upon the
real estate properties. The real estate tax varies to create
incentives for the effective use of the property. So, different
rates are proposed by the different government belonging to the
different parties. On a similar note, sale tax is also manipulated
to stimulate the sales and business activity. There is no nay
federal value added tax in the USA. Rather, it is the state level
taxation that is also applied upon the economic activities.
The modification in the taxation in terms of rates modification and
new proposals, help the candidates to attract and make them think
favorably towards their party candidates at different level of
election. It helps them to win the election. Besides, the favorable
proposals on taxation also help the party candidates to get
donations from the different enterprises, industry associations and
other groups who lobby for the change on the similar lines. It
makes the tax related policy to be one of the most attractive topic
of debate and a major consideration to attract the voters. It helps
them win the elections as people think that one party has, the more
realistic, favorable and correct plan to implement and improve the
economic scenario. Hence, it shapes the election and policy
planning as well.