Fiscal policy

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					Fiscal policy
Overview of Fiscal policy fiscal policy
State fiscal policy is under a certain period of political, economic and social
development tasks under the guidance of the principle of financial work, through
fiscal spending and tax policies to regulate aggregate demand. Increased government
spending can stimulate aggregate demand, thereby increasing the national income,
otherwise depressed aggregate demand and reduce national income. Tax on income is
a contractile force, therefore, increase government revenue, which can inhibit the
reduction of national income, aggregate demand, whereas the increase in national
income to stimulate aggregate demand. It is developed by the state, representing the
will and interests of the ruling class, with distinct class character, and is subject to a
certain level of development of social productive forces and economic relations
between the corresponding constraints.

State fiscal policy is an integral part of overall economic policy, with other economic
policies are closely linked. Fiscal policy formulation and implementation, should
monetary policy, industrial policy and income distribution policies and other
economic policy coordination.

There are two forms of government spending: first, government purchases, referring
to the government's spending on goods and services - to buy tanks, build
roads, pay the salaries of judges, etc., followed by government transfer payments, to
improve some groups (such as the elderly or the unemployed) income.

Tax is another form of fiscal policy, which affect the overall economy in two ways.
First, the tax impact of people's income. In addition, the tax could affect
the goods and factors of production, and thus can affect the incentives and behavior.
The content of fiscal policy
It contains:
◆ The total product of society
◆ national income distribution policies
◆ budget revenue and expenditure policies
◆ Tax Policy
◆ Financial Investment Policy
◆ Financial subsidies
◆ Debt Policy
◆ extra-budgetary revenue and expenditure policies
Is a complementary relationship between them.
The formation and development of fiscal policy
Fiscal policy, with the change in the way of social production and growing. Slave and
feudal society, due to self-sufficient economic constraints, the state can not large-scale
social and economic organization. Slave owners and major landlords fiscal policy to
consolidate its dominant position as the political functions of the service in the capital
accumulation and capitalist formation period, the rulers are generally predatory fiscal
policies implemented to accelerate the process of capital accumulation.
Early in the capitalist countries, are generally simple to implement political light tax,
balanced budget fiscal policy, facilitate the free development of capitalism. Period of
state monopoly capitalism, socialized production and capitalist private ownership has
become an increasingly intensified, gradually increase the government's
economic functions, fiscal policy not only for the service to achieve national political
functions, but government intervention and regulation as an important tool for social
and economic life.
Particularly in the 20th century produced 30 years of Keynesian fiscal policy to
become regulate the economy, an important means to save the economic crisis: the
recession period is often implemented expansionary fiscal policy to stimulate
aggregate demand, speed up economic recovery; in the economic boom period, the
practice contractionary fiscal policy to reduce aggregate demand, delay onset of
economic crisis.
Since the establishment of a socialist country with public ownership as the mainstay
of the economy, the state focused on the whole will of the people, represents the
fundamental interests of the people can consciously based on objective economic laws
called for fiscal policy. On the one hand to promote the people's
democratic political power, organization and coordination of social and economic life
on the one hand, the consolidation of the socialist mode of production, rising to meet
the people's material and cultural needs service.
Supply-side fiscal policy
Supply-side fiscal policy (supply-side economics fiscal policy) advocated a
progressive income tax rate reduction, reform of the social welfare system, to achieve
a balanced budget fiscal policy point of view. Keynesian fiscal policy with the
Progressive income tax rates reduce the view
Supply school asserts that the natural momentum of economic growth is stifled local
fiscal expenditure to stimulate demand, can only bring inflation, and high progressive
tax rate is choking economic growth and restrain the main obstacle to the
development of production.
Supply-side tax cuts that, in particular, lower marginal tax rates, can produce various
positive economic impact, such as encouraging people to work overtime to manage
the business, to postpone retirement, reduce the unemployment period, and increase
revenues. So that people can have more money for expenses, especially more money
for savings, while savings and income to stimulate the combination, but also to
encourage investment. In this connection, it just reflects the role of the Keynesian
school of thought that tax cuts increase aggregate demand is only different focus.
Supply-side advocates, tax cuts to encourage savings and work and according to the
direction of encouraging investors to design, advocated a progressive tax and
corporate tax cuts. It advocates the high income tax increase on low-income tax cuts
but only liberals are diametrically opposed. Supply-side that, when high progressive
tax rates to prevent the accumulation of wealth entrepreneurs, social losses than
revenue as much, it is lost when entrepreneurs to develop their career with the
invention innovation, risk-taking and innovative spirit of the ( see supply-side tax
View of reforming the welfare system
School supplies that the financial expenditure in a stifling effect on economic growth
is the social welfare expenditure. They think that income transfer ─ ─ welfare,
social insurance, unemployment benefits, etc., the negative impact on individual
initiative, and high progressive income tax rates the same. This is because the level of
benefits does not work than individuals obtained from the net income how much
lower, in the payment of relief, allowance for household surveys before the applicant
made public after the effective tax rate levied to receive relief funds into making some
people Others take the behavior of individual income. Therefore, the system
encouraged people who do not want to work, while the contusion is a positive person.
They believe that the current U.S. welfare system on many occasions to make a living
by being a lot of hard workers who receive more than the net income level of benefits.
This anomaly will lead to higher unemployment. The workers know that
unemployment benefits will help themselves, through unemployment, unwilling to
find seasonal work period, employers are willing to dismiss the workers in the
off-season, because workers can receive unemployment benefits. Supply-side attack
the U.S. federal government's welfare policy is a manifestation of outdated
Keynesian view. Only concerned with the maintenance of personal income levels,
regardless of whether they work and savings, as long as consumption on the line.
When people receiving unemployment benefits by relying on hard work than to live
as good or even better, this system is completely ridiculous.
View to achieve a balanced budget
Supply-side fiscal policy against the deficit. They believe that the budget deficit can
only be deprived of private enterprises to increase the capital and the financial market
"crowding out"; or deficit occurred when the government is to
increase circulation to make up for when the money will cause inflation . If an
equivalent increase in taxes and government spending, then the private
sector's enthusiasm will be dampened further depressed the economy
further. Although they oppose the deficit, but not in favor of a balanced budget as a
precondition for the implementation of tax cuts. They further advocated the
implementation of a budget surplus before tax cuts as "traditional
budget-balancing theorists" to attack. In their view, to deal with
free-spending liberal in the best way is to give priority to tax cuts. Supply-side
inflation caused by deficit financing is also opposed to the views. They pointed out
that inflation is essentially a monetary phenomenon. If the U.S. Federal Reserve
unduly increase the money supply, then the balance will occur regardless of whether
the budget inflation. If the Ministry of Finance to the public sale of all its bonds to
cover the deficit, it was just to absorb the same amount of private savings and raise
interest rates came. To private investors squeezed out from the market is certainly not
an appropriate approach, but it is not the root cause of inflation. Does not increase the
amount of money over there will be no general price level rose.
The type of fiscal policy
(1) expansionary fiscal policy (also known as the proactive fiscal policy) is the
distribution of activities through the financial community to increase and stimulate
aggregate demand; increase in national debt, expenditures exceed income, fiscal
deficits to achieve:
(2) contractionary fiscal policy is through the financial allocation to reduce and inhibit
the activities of aggregate demand;
(3) neutral fiscal policy is the allocation of the financial activities of the impact on
aggregate demand neutral.
Means of fiscal policy
The means of fiscal policy, including tax, budget, treasury, purchasing expenditure
and transfer payments and other means.
Countries to achieve the objectives of fiscal policy adopted by the economic, legal
and administrative measures combined. Mainly refers to economic measures financial
leverage; legal measures are adopted legislation to regulate the relations of
distribution of various financial and fiscal revenue and expenditure behavior, legal
sanctions against illegal activities; administrative measures that government agencies
use executive power to intervene.
The choice of fiscal policy instruments is the nature and objectives of fiscal policy
determined. Fiscal policy and specific objectives of the class nature of the different
measures taken are different.
The basic means of China's fiscal policy are:
① the national budget. Budget revenue and expenditure, mainly through the
determination of size and balance, revenue and expenditure structure of the
arrangement and adjustment to achieve the objectives of fiscal policy.
② tax. Mainly through taxes, tax rates to determine and ensure the state revenue,
regulate the distribution of socio-economic relations in order to meet the national
political and economic functions of financial resources to fulfill the needs of
coordination of economic development and social stability and equitable distribution.
③ financial investment. Extrabudgetary funds through the national budget and guide
the flow, flow, in order to achieve consolidation and strengthening of the socialist
economic base, the purpose of adjusting the industrial structure.
④ financial subsidy. It is the country according to the objective requirements of
economic development law and policy needs a certain period through fiscal transfers
in the form of directly or indirectly to farmers, enterprises, workers and urban
residents with financial assistance to achieve economic stability and social stability
and harmonious development of the purpose of .
⑤ the financial credit. Paid in accordance with the principles of the country, raising
funds and the use of a redistribution of financial means, including issuing bonds in
domestic and special bonds, government bonds issued abroad, to foreign governments
or international financial organizations, loan, and the paid use of budgetary funds to
implement flow form.
⑥ financial legislation and law enforcement. National legislation on fiscal policy
through the law to be determined, and various acts of violation of financial regulations
(such as refusal to pay tax evasion violations of tax laws, etc.), access to justice in
accordance with the provisions of the law to be heard and sanctions to ensure that
fiscal policy objectives.
⑦ financial monitoring. Fiscal policy to achieve the important objectives of
administrative measures. The state department of state enterprises through financial
institutions, national agencies and organizations and their staff in implementing fiscal
policy and fiscal discipline inspection and supervision of the situation.
Adjusting the fiscal policy
Modern state's fiscal policies are different times with different political and
economic development needs constant adjustments. However, this adjustment has
remained relatively stable during a given period. The main adjustment methods are:
① dynamic regulation. Changes socio-economic development that is under the
provisions of the appropriate fiscal policy.
② overall conditioning. From the overall situation between the organization of
economic activity, the balance between economic and social undertakings in the
coordinated development of fiscal policy.
③ active regulation. Economic development that is based on the understanding and
the development of targeted policies. Regulate the economy's fiscal policy,
expansive fiscal policy, tight fiscal policy, balanced fiscal policy, the total adjustment
policies and structural adjustment policies.
   Active fiscal policy is the government response to financial crisis, economic
recession and to prevent the important macro-policy. Proactive fiscal policy is
expansionary fiscal policy that increases government spending to expand aggregate
demand. Such as issuing bonds to increase infrastructure The aim is to promote social
investment and stimulate economic growth.