Fiscal Policy Paper
Fiscal Policy
ECO/372
June 11, 2012
Fiscal Policy All the people in the United States are effected by the fiscal policies. Team C will address the how and why the U.S. budget deficits, budget surpluses and debt effect different individuals and institutions. There are a wide array of individuals effected by fiscal policy, which include tax payers, future Social Security and Medicaid users will be effected. The unemployed individuals and University of Phoenix students will be effected by fiscal policy. The U.S. financial reputation , an exporter, and importer, and effects of the GDP will also be covered about the effects of the U.S fiscal policy.
Effects on Tax Payers The U.S. budget deficits can affect tax payers in a negative aspect by subjecting the tax payers to increased taxes within the country to offset the deficit. This increase could be aimed at the middle and lower class citizens, which may cause financial difficulties. Also the budget deficit does impose interest costs on tax payers, meaning that the national savings totals are lower and this decreases the amount of private investing (Ackerman 2004). This higher interest cost will have a direct affect on the trade deficit, which will cause Americans to become even more dependent on exports for their consumer needs. The U.S. budget surpluses would affect tax payers in a positive aspect by refunding tax payers any previous overpayment of taxes. This could also decrease income taxes that are being paid by tax payers, since the surplus will increase national savings. Another benefit from a surplus is that it will stimulate investing by offering lower interest rates, which would increase tax payers savings when filing taxes (Hall 2012). For example: new mortgages would offer interest write-offs on personal tax returns. The U.S. budget debt affects the tax payers in several different areas: higher taxes, reduced benefits & programs, and higher interest rates. The U.S government cannot
ECO/372
June 11, 2012
Fiscal Policy All the people in the United States are effected by the fiscal policies. Team C will address the how and why the U.S. budget deficits, budget surpluses and debt effect different individuals and institutions. There are a wide array of individuals effected by fiscal policy, which include tax payers, future Social Security and Medicaid users will be effected. The unemployed individuals and University of Phoenix students will be effected by fiscal policy. The U.S. financial reputation , an exporter, and importer, and effects of the GDP will also be covered about the effects of the U.S fiscal policy.
Effects on Tax Payers The U.S. budget deficits can affect tax payers in a negative aspect by subjecting the tax payers to increased taxes within the country to offset the deficit. This increase could be aimed at the middle and lower class citizens, which may cause financial difficulties. Also the budget deficit does impose interest costs on tax payers, meaning that the national savings totals are lower and this decreases the amount of private investing (Ackerman 2004). This higher interest cost will have a direct affect on the trade deficit, which will cause Americans to become even more dependent on exports for their consumer needs. The U.S. budget surpluses would affect tax payers in a positive aspect by refunding tax payers any previous overpayment of taxes. This could also decrease income taxes that are being paid by tax payers, since the surplus will increase national savings. Another benefit from a surplus is that it will stimulate investing by offering lower interest rates, which would increase tax payers savings when filing taxes (Hall 2012). For example: new mortgages would offer interest write-offs on personal tax returns. The U.S. budget debt affects the tax payers in several different areas: higher taxes, reduced benefits & programs, and higher interest rates. The U.S government cannot
References: Ackerman, S. (Nov/Dec 2004). The Budget Deficits Bigger Brother. Retrieved from:www.fair.org/index.php?page=3562 Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin. Ginsburg, H. (2009) National Jobs for All Coalition: Increasing Unemployment Increases the Deficit. Reducing Unemployment Reduces the Deficit. Retrieved from url:www.njfac.org/us1.htm Hall, S. (2012) How does the government surplus affect the economy? Retrieved from url: www.ehow.com/about_6193482_government-budget-surplus-affect-economy_.html Huntley, J. (2010). Federal Debt and the Risk of a Financial Crisis. Retrieved from http://www.cbo.gov/publication/25094 NDT (2012) No Debt Today: How the National Debt Affects You. Retrieved from url: www.nodebttoday.com/how-national-debt-affects-you.php Nelson, L. A. (2011). Inside Higher ED. Retrieved from http://www.insidehighered.com/news/2011/07/18/increased_student_loan_interest_rates_to_reduce_deficit_and_probably_not_expand_grants Quinn II, C. (2011), THE FAMUAN. Retrieved fromhttp://www.thefamuanonline.com/news/obama-s-budget-cuts-college-student-grants-1.2478105 Worksham, R. (2012) Government Debt Relief Programs for the Unemployed. Retrieved from iurl:www.ehow.com/list_7330593_government-debt-relief-prgorams-unemployed.html