Question

Originally, the sole objective of the federal government in taxing income was to generate financing for government expenditures. Although this purpose continues to be important, social and economic objectives have been added.” Substantiate the statement with enough explanations.

Thanks

Answer 1

THE SOLE OBJECTIVE OF THE FEDERAL GOVT IN TAXING INCOME WAS TO GENERATE FINACING FOR GONT EXPENDITURE ,THIS IS PURPOSE OF CONTINUES TO BE IMPORTANT ,SOCIAL AND ECONOMIC OBJECTIVES ,

THE ANNUAL STATEMENT OF THE OUTLAYS AND TAX REVENUES OF THE GOVT OF THE UNITED STATES TOGETHER WITH THE LAWS AND REGULATIONS THAT APPROVE AND SUPPORT THOSE OUTLAYS AND TAX REVENUES MAKE UP FEDERAL BUDGET. THE FEDERAL BUDGET HAS TWO PURPOSE ;

1.TO FINANCE THE ACTIVITIES OF THE FEDERAL GOVT

2.TO ACHIEVE MACROECONOMIC OBJECTIVES

THE USE OF THE FEDERAL BUDGET TO ACHIEVE MACROECONOMIC OBJECTIVES SUCH AS FULL EMPLOYMENT ,SUSTAINED ECONOMIC GROWTH ,AND PRICE LEVEL STABILITY IS CALLED FISCAL POLICY.

FISCAL POLICY IS THE CONTINUING POLICY AND RESPONSIBILITY OF THE FEDERAL GOVT TO USE ALL PRACTICABLE MEANS ...TO COORDINATE AND UTILIZE ALL ITS PLANS ,FUNCTIONS,AND RESOURCES TO PROMOTE MAXIMUM EMPLOYMENT ,PRODUCTION ,AND PURCHASING POWER.

OUTLAYS AND TAX REVENUES ARE ,

TAX REVENUES :THESE REVENUES COME FROM FOUR SOURCES ;

1.PERSONAL INCOME TAXES

2.SOCIAL SECURITY TAXES

3.CORPORATE INCOME TAXES

4.INDIRECT TAXES

OUTLAYS ARE CLASSIFIED IN THREE CATEGORIES,

1.TRANSFER PAYMENT

2.EXPENDITURE ON GOODS AND SERVICES

3.DEBT INTEREST

BUDGET BALANCE AND DEBT

THE GOVT BORROWS WHEN IS WAS A BUDGET DEFICIT AND MAKES REPAYMENT WHEN IT HAS A BUDGET SURPLUS.

GOVT DEBT IS THE TOTAL AMOUNT THAT THE GOVT HAS BORROWED .IT IS THE SUM OF PAST BUDGET DEFICITS MINUS THE SUM OF PAST BUDGET SURPLUS .

DEBT AND CAPITAL

BUSINESS AND INDIVIDUALS INCUR DEBTS TO BUY CAPITAL ASSETS THAT YIELD A RETURN . IN FACT THE MAIN POINT OF DEBT IS TO ENABLE PEOPLE TO BUY ASSETS THAT WILL EARN A RETURN THAT EXCEEDS THE INTEREST PAID ON THE DEBT .MUCH GOVT EXPENDITURE IS ON PUBLIC ASSETS THAT YIELD A RETURN .

THE SUPPLY SIDE ;EMPLOYMENT AND POTENTIAL GDP,

FISCAL POLICY HAS IMPORTANT EFFECTS ON EMPLOYMENT , POTENTIAL GDP ,AND AGGREGATE SUPPLY THAT WE WILL NOW EXAMINE .THESE EFFECTS ARE KNOWN AS SUPPLY SIDE EFFECTS .FULL EMPLOYMENT AND POTENTIAL GDP IN THE ABSENCE OF TAXES ,THEN WE WILL INTRODUCE AN INCOME TAX AND SEE HOW IT CHANGES THE ECONOMIC OUTCOME.

INVESTMENT, SAVING ,AND ECONOMIC GROWTH