Fiscal Policy

Week 3 Assignment 2

Fiscal Policy

If I were to develop a plan to propose taxed for my town, I would take into consideration what is needed for the community in the coming year.   I would take into account the schools, fire departments, libraries, parks and recreation.   I will look at how much we will need for each area to run as taxes will be our main source of revenue.   Based on that need I would develop a tax rate that will raise the needed tax dollars.   The total taxes collected would increase only when the spending increased.

When selecting taxes to be on small businesses I am going to assume they have higher incomes and can afford to pay a greater portion of their income in taxes.   I would require small business owners to register with the state tax agency for tax permits so that they can collect sales tax from customers.   I would also impose income taxes, and I would require small businesses to pay employment taxes.   In addition to federal taxes I would hold them responsible for paying workers’ compensation insurance and unemployment insurance taxes.   I believe these taxes will help the town in the long run as they are taking into account the people and the town at the same time.

When selecting taxes for property owner I am going to assume they have lower incomes and their only real assets of value are their house and cars so I would have them to pay less in taxes.   I would only impose a property tax which is measured by the value of the property and have them pay tax and title on their cars.

When selecting taxes to impose on local shops and supermarkets, I am going to assume that their income changes based on sales so I will base the tax amount on income.   I would impose property tax which is based on the value of the business and impose sales taxes depending on the type of business and items they sale.

Regressive taxes are most beneficial to the sustainability and growth of private businesses, because it is a tax that charges a lower...