Public Sector Economics Essay

In describing the economic advantages and disadvantages of the proposed impose policy change the advantage is that revenues increase substantially from $9,134 billion to $184,807 billion. From a macroeconomic viewpoint, the more money in circulation, the more money the firms volition receive. With a greater amount of funds in circulation the more that workers leave alone have in their net income. This concept stimulates the economy as a hole in a revenue approach and cash in circulation.On the contrary, the disadvantage is that the proposed value rate was increased by 0. 03 percent, the finance sector was taxed and no one was home in rated besides Agriculture. In cover the current law of products the advantage is that the tax rate is slightly swallow at 0. 07 percent and all products were exempted from taxes, and zero rated thus receiving money adventure in term of a credit. Despite the low revenue in that respect the current tax policy tends to be more efficient.Consideri ng that there ar no taxes and credits are being received in terms or revenues. Focusing on the Proposed justness, this would be bias and favorable to the federal government. The federal tax system relies on a number of divergent types of taxes to generate revenues. Therefore raising the tax rate 0. 03 percent to 0. 10 the federal government is able to have more in revenues. In discussing the Current Tax Law, this would be more favorable to the consumers because of the lower tax rate.As consumers we want to stipend less in taxes lower taxes in turn pushes out the overall take curve as we demand more goods and services with higher disposable incomes. Supply side tax cuts are aimed to stimulate capital. If successful, the cuts will shift both aggregate tot up and demand because the price level for a supply of goods will be reduced, then it leads to an increase in demand for those goods. To label this table flat or vertical equity, we would say that the table would be more conf irmative to vertical equity dependent on proposed or current law.By definition vertical equity, is a method of collecting income tax in which the taxes paid increase with the amount of earned income. The driving principle bed vertical equity is the notion that those who are more able to pay taxes should contribute more than those who are not. In reviewing the table we would agree that the Proposed Law would match well with the vertical approach and horizontal equity would be the explanation of the Current Law system, because there are more zero rated products that offer credits.