¶ … limiting factor in determining the size of a budget in the public sector is the capacity to tax or generate revenue. To compute fiscal capacity, a representative tax system should assess the level of personal income, the value of retail sales, and the value of property. However, there are other areas that governments should focus on when striving to ensure and maintain revenue generation. Diversifying a revenue portfolio is paramount, especially when the economy takes a downturn. The following essay evaluates whether evaluate whether, Swobodaville, a hypothetical city has an adequately diverse tax mix, and recommends possible actions to improve its tax base.
The city Swobodaville is compared to 'Comparator'. Swobodaville has a significantly higher personal income than comparators, although its corporate income is slightly lower. For some unknown reason, the sales tax that Swobodaville has to pay is significantly lower than comparators as is its property tax. On the other hand, Swobodaville pays higher tax on other items.
Before levying tax, what one also needs to know is the impact that increasing tax on a particular factor (such as property) will have on the individuals in the city. One also needs to know the efficiency costs of
Changes in one market always have impact on other markets, and so the government to test should conduct a single-market analysis otherwise called partial equilibrium analysis to test possible impact on other fields. Increasing the burden sales tax, for instance, may cause citizens to buy from other states or foreign companies (Scissors, 2002). Given that the country is currently experiencing a harsh economic situation and that its corporations seem to be doing less well than those in other cities, the government may want to encourage entrepreneurial activity and not discourage it by boosting the sales tax on its products.
The government should also compute the efficiency loss to the population as a whole that results from price increase in a certain area. Marginal social benefits of consuming a certain good should be equal to or greater than the costs of producing that good. Secondly, no other party should be worse off by consumers consuming that good. The citizens of the city, therefore, may be willing to pay extra on certain commodities for it is still worth their while to buy it, i.e. consuimers are willing to pay extra for consumpotion since maarginak benefits of consumption are still equal or greater than marginal costs of production.. Furthermore, there are no spill-over costs…
Revenue Mix Tax revenue is a fundamental component to governmental budgets and subsequent spending. Particularly, in economic downturns, government tends to spend large sums of money in an effort to stimulate the economy and drive economic growth. To properly prepare and mitigate the cyclical nature of tax revenues, diversification is required. Through proper diversification, governments are better positioned to provide adequate service irrespective of the prevailing macroeconomic circumstances. Although aspects such
Revenue Estimates: Underestimation of Revenues Although the United States has an excellent budget policy, she is yet to reach maximum efficiency with regard to revenue estimation. When it comes to public budgeting, ours is a picture that is far from the ideal. There has been a consistent pattern of underestimation of revenues in federal, state, local, as well as agency budgets. This trend may not be desirable for a recovering
With expensing, the first tax is abolished. Saving is, in effect, deducted in computing the tax." The following list summarizes the key aspects of the flat tax (Rabushka, 1997): 1. "The flat tax, in effect, removes the tax code from the economy. No individual, household, or firm needs to take into account any tax complications that arise from their economic decisions and activities. The tax system is designed for the sole
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Specifically focused on products for each phase of a persons' life, this business segment is the most mainstream in terms of promotional strategies. Skin Care, OTC and Nutritionals have successfully given JNJ a permanent marketing strategy for selling to women in the 25-34 and 25-45 segments, two of the fastest growing demographic markets for these products. Product Strategy The biggest challenge for JNJ is the ability to quickly develop and launch
The people who opt for early retirement stop staring contribution to pension system where as they start getting the benefits of pension system. (Prieto, 1997) The traditional unfunded social security system is facing lot of problems in the United States and other developing countries with the increasing life expectancy of the people. The cost of providing any level of service is directly linked to the percentage of people who are
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