Unit 3 Taxes PPT
Download
Report
Transcript Unit 3 Taxes PPT
Fiscal Policy Influence
on the Economy
Government Taxing and Spending Policies
The health of a nation’s economy is
influenced by governmental policy (fiscal
policy)
Fiscal policy can be used to spur economic
growth
Economic policy decision made by
government result in both intended and
unintended consequences
Fiscal Policy Overview
Intended Results
What the
government MEANT
to happen
Spur economic
growth
Increase consumer
spending
Increase
employment
Unintended Results
What the
government DID
NOT MEAN to
happen
Unforeseen
problems
Backlash against
programs/spending
Effects of Fiscal Policy
Personal Income
Tax – a
percentage of
gross income
Sales Tax – on
items purchased
Property Tax – a
percentage value
of your
land/house
Tariffs – placed on
imports
Government Taxing
Joking about
Taxes
What is the intended
purpose of this cartoon?
Permanent
Social Security –
retirement/disability
Short Term
◦ Overview of
Information
Medicare –
government funded
health care coverage
Entitlements – items
above, plus salaries
and benefits for
employees
Government Stimulus
Checks – one time
payments intended to
spur spending
CARS – aka – “Cash
for Clunkers” –
intended to promote
growth in struggling
auto industry
Government Programs
Social
Security –
Medicare
–
Stimulus
Checks –
CARS
-
Unintended Effects of Programs
Intended Purpose – to encourage consumer spending
on new vehicles
◦ Boost the struggling American automobile industry
Production and Sales
Unintended Results – 6/10 top 10 cars sold were
foreign models Top Ten Sales
◦ Still promotes American economy growth
◦ Many people who wanted to participate were
ineligible
◦ Unknown long-term effects – especially on
employment
◦ Increased government spending – incentive to
buyers (discount financed by the federal
government)
Policy Example - CARS
Intended Effects
Regulate commerce
with foreign countries
Protects American
jobs and farmers
Encourage American
industry and
production
Unintended Effects
Trading partners
retaliate: reduce
American exports by
½ (23 official protests)
Spike in
unemployment
World trade decreased
66% between 1929
and 1934
Tax Example – Hawley-Smoot Tariff 1930:
increased taxes on agricultural and industrial
imports to record high