This article is about the federal taxation, which mainly refers to government’s expenditure and taxation activities and decisions, and mainly how they affect the economy. Fiscal policy is the word used to refer the federal taxation. The article also examines the fiscal policy, which are the budget decisions planned by the federal government and consequences faced. The author is Tom Gorman, published in 2006 by the Columbia press.
The author of this article shows how federal budget of the money from taxation can make a large difference to the economy, section of population or region, and industries to a state or country. The author says that decisions on taxes are very essential and that the raising of taxes can greatly affect the country’s economy and the careers. The author agrees with article’s idea of reforming the communal tax system including a lower communal rate and adopting a territorial type of taxing internationally in order to enhance the state’s job creation and economy.
The author consistently practices the automatic stabilizing influence on fiscal policy, which has an effect on the economy even when clear changes are done by the government, in the tax and the spending plans. This happens especially in the time of downturns, the federal government apt to preserve its normal level of spending during downturns and this ensures a firm baseline level of demand from the governance spending.
Secondly, as a multiplier, this will increase the effect of decrease or an increase in spending or taxes. For example, a dollar that is extra in the government spending will improve the economy, and when is repeatedly spent it will increase the stimulus given by the dollar. Finally, the tendency of spending and saving whereby the government reduces the tax in order to increase consumption will not raise the consumption and the investment since the households save the money instead of spending it.
In conclusion, the government has the authority to tax in order to have greater control over the revenue. This will assist in increase state’s economy and job creation to the households.