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Problems of Defining an Optimal Fiscal System

This is a perfect example of how regressive this kind of taxation modeling is. We propose to make a far more progressive taxation model that is both fairer, shifts the burden more equally to those who can afford it the most, and reduce both government expenditure through a thorough examination of how government and private enterprise work best together (rather than just pure outsourcing or automatic privatization which carries its own problems) plus adoption of new polices which have been proven to work in terms of job and revenue creation both in the private sector and for the state.

It is our opinion that blue collar workers, for example do not have capital gains to get tax credits on in the first place, and a lower overall annual income, where approximately one third of a population who even pays taxes means that these polices effectively only benefit a third of society, therefore by definition, such policies benefit ONLY an elite section of society, and this wealth transfer effect is one that is cumulative over time, leading again to the exact situation we wish to avoid – the upward transfer of wealth from the working and middle classes to a smaller and

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smaller elite – thus creating vast differentials in income disparity, and at the same time political resistance to increased taxation to provide essential social services by the government not only for those who are not only benefitting from cut programs, but being left further and further behind, AND infrastructure necessary for the basic functioning of society (such as the building of roads, sewers, schools and the like) becoming even more of a drag on the state’s budget, and leading to increased political infighting and lack of co-coordinated political will and coalitions to get anything done – in other words leading directly to both the increasingly dysfunctional role of government and increasing contempt for it by the general public.

A vicious cycle if there ever was one.

This is particularly true in a scenario like the one where we face today, where we already face an already high and unacceptable level of public debt, which our goal is to reduce if not eliminate, with, if we rely on traditional tools and thinking, we have almost no options left, no political capital, and a gargantuan task ahead of us of retooling society and its infrastructure according to the demands and requirements of lowering our carbon footprint.

Clearly, a new approach to the problems we face, which start with taxation polices are absolutely required if not mandatory. Overall Fiscal Environment While short term, government spending is higher, to inject a temporary stimulus into the environment to counteract the worst effects of the economic crisis of 2008, this will taper off into a longer term government reduction in spending and our long term planning, projections and fiscal modeling plan for that. Figure 2: Public Spending As a Percentage of National Income 2008-2018 Chote, R. , Crawford, R. , Emmerson, C. , Tetlow, G. 2009, ‘Britain’s Fiscal Squeeze’, IFS Briefing Note BN87, Economic & Social Research Council, p. 3 Criteria Used For Remodeling Immediate Requirement to Drastically Reduce Public Debt

Infrastructure Income: Because it is the intent over the next eight years to lower the public debt, while at the same time government spending is also planned to decrease, it is imperative that any government funded projects, whether they be wholly funded by government funds or entered into with private partners, generate income for the state to help reduce the debt. Just the interest on that debt is a waste of public funds. Use of Sustainability Economics and Cleantech to Alleviate Government Spending Cuts, Provide New Sources of State Revenue & Transition Economy to Carbon Free, Cleantech Paradigm Use of Sustainability Economics In Planning: Because it is still unclear how deep the damage is that was sustained to the global economy from the Economic Crash in 2008, much less the speed of the recovery or the new shape of the economic environment after the economy recovers (i. e.

more use of teleworkers, a greener economy, especially with the implementation of EMEA’s first smart grids at the end of the year and more clean energy production, not to mention the revenues from such things as carbon auctions), revenue projections for tax incomes of any kind are assumed to be kept at a steady state – i. e. drastically reduced because of the recession, and not projected to grow at a significant, economy expanding rate during this period. We have simplified our projections by assuming flat growth YOY for the next five years, to be conservative in terms of income generation for the state. Indeed we question the notion of the ever expanding economy at this point in the globe’s history and time, and will not base a state income or future budget on such assumptions. Government Revenue Generation From Employment & Corporate Taxation Under Normal Model

We assume a higher than normal unemployment rate and a slower than normal “recovery rate,” for at least the next 3-5 years based on various factors including economic forecasting dating including that used by The Bank of England (see below) which allows for modest economic growth, although we assume flat GDP for the most conservative estimates possible to insure the best outcomes in forecasting (i. e. no blue sky projections that later crash and burn), but not enough for real job creation. We do not anticipate employment levels returning to pre-crash 2008 levels for at least the next five years, and associated income streams from tax revenues to increase accordingly. Figure 3: Projected Economic Growth 2009-2018, Bank of England Projections

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