Taxation policy, revenues, social-economic equity key terms and practices
Calculate and describe the effects of government taxation policies relative to citizens regarding progressive, regressive, or proportional structures
There are three tax structures and these are progressive, regressive and proportional strictures. Progressive tax structure, as the name suggests, is that whereby the tax rate increases with an increase in taxable income. In the application of this kind of structure, it is usually presumed that the average tax rate is less than the marginal tax rate. The progressive structure has the effect of bringing income equality to citizens as it operates in such a manner that reduces the incidence of those people with a low ability to pay as the tax burden is shifted to those citizens with a higher ability to pay (Cordes, 2005).
Example of progressive tax
Using the tax bracket below. The income tax for the lowly paid ($17,000) and the highly paid ($1,000,000), the respective taxes can be computed as follows.
Low income
1/100 x $17,000= $170
High income
12.3/100 x $1,0000,000 = $123,000.
On the other hand, a regressive tax structure is that whereby the average tax decreases as the taxable income increases. This is actually, the direct opposite of progressive tax. The presumption, in the application of this kind of tax structure, is that the average tax rate is higher than the marginal tax rate. The effect of the application of the regressive tax structure is that it imposes a higher tax burden to the lowly paid than to the highly paid.
Last but not least, a proportional tax structure is one that applies a uniform tax rate. In this case, the lowly paid and the highly paid are subjected to a similar tax rate. In this case, the average tax rate is equivalent to the marginal tax rate. The effect of the proportional tax structure to citizens is that it makes those wealthy wealthier and the poor poorer (Cordes, 2005). To this end, it can, therefore, be stated that the assigned material met the module learning objective as it practically shows the manner in which the three tax structures operate and the effects that they have on citizens through the various examples provided under each tax structure. However, I didn’t know that there was a regressive tax structure.
Example for regressive and proportional tax.
Assuming the highest-paid employee gets $1,000,000 and the lowest-paid employee gets $17,000, while the government applies a tax rate of $5,000. The computation for regressive and proportional taxes will be the same and this will be as follows.
Highest paid: $1,000,000- $5,000 = $995,000
Lowest paid: $17,000- $5,000 = $12,000
Identify the key aspects of the revenue forecasting process for local governments.
There are various aspects of revenue forecasting process for the local governments and this include the proceeds from sales of both consumer goods and property, changes in population, changes in laws, along with changes in the local fee ordinances (Murphy and Nagel, 2002). The two main ones are the sales proceeds and property taxes. When it comes to the first aspect which is the proceeds from sales, various elements come into play and these are the consumer demand along with the rate of inflation. The higher the projected rate of demand the higher the forecasted revenues. Conversely, the higher the rate of inflation, the lower the forecasted revenues.
A critical analysis of the various aspects of revenue forecasting indicates that sales and property taxes form the largest portions of local government revenues. On the other aspect which is the changes in population, an increase in the number of employed persons will lead to an incremental or rather positive revenue forecast. The case is similar to the changes in tax laws and local fee ordinances. To this end, it can, therefore, be stated that the assignment material met the model learning objective as it highlighted the two key aspects of the revenue forecasting process for local governments. However, I didn’t know that property taxation counts in the projections by the local governments.
Articulate the meaning and applications of Social/economic equity in public administration.
Social and economic equity in the public administration refers to the management of the institutions that are mandated to serve the members of the public using some assigned resources in a fair, equitable and just manner (Free, 2010). To enhance equity, this concept is applied in such a way that the highly paid are highly taxed while the lowly paid are subjected to a lower tax bracket. Given this case, a fair distribution of resources is attained (Norman-Major, 2011). Last but not least, to enhance justice, the revenues generated from the high-income earners are usually used in social projects, whose beneficiaries are mainly the poor (Svara, & Brunet, 2005). To this end, it is evident that the learning objective of the meaning and the application of social/economic equity in public administration was attained.
References
Cordes, J. J. (2005). The encyclopedia of taxation & tax policy. Washington, D.C:
Urban Institute Press.
Free, R. C. (2010). 21st century economics: A reference handbook. Thousand Oaks, Calif
: SAGE.
Murphy, L. B., & Nagel, T. (2002). The myth of ownership: Taxes and justice. Oxford:
Oxford University Press.
Norman-Major, K. (2011). Balancing the Four E s; or Can We Achieve Equity for Social
Equity in Public Administration? Journal of Public Affairs Education, 17(2), 233-252.
Svara, J. H., & Brunet, J. R. (2005). Social equity is a pillar of public administration. Journal of
Public Affairs Education, 11(3), 253-258.
References