Impacts of Fiscal Policy on Income Distribution (1 Viewer)

[Phaze]

What do you guys think are the major impacts of fiscal policy on income distribution? Not specifically this budget but fiscal policy in general.

 

[Cleavage]

What do you guys think are the major impacts of fiscal policy on income distribution? Not specifically this budget but fiscal policy in general.

Fiscal policy can be divided into two 'sub-policies' - spending and taxation.

Spending
The more a government spends in social welfare, the more equitable income distribution will be (obvious). General increases in spending, i.e. expansionary fiscal policy, tends to reduce unemployment. A reduction in unemployment largely impacts lower income earners, because they tend to be the section of the labour force prone to cyclical unemployment, while higher income earners are less affected.. As such, expansionary spending to reduce unemployment tends to improve income distribution.

Taxation
Progressive taxation systems (taxing higher income earners at a higher rate), adopted by most of the world, improves income and wealth distribution significantly. The more progressive a country's adopted taxation system, the lower the GINI co-efficient (0 gini co-efficient is perfectly equal income distribution). Conversely to before, contractionary fiscal policy, such as lifting tax rates, disproportionately impacts lower income earners, because rising unemployment blah blah blah.

Fiscal policy has a very dramatic impact on income distribution. Above is only some of the impacts.

 

[Phaze]

Fiscal policy can be divided into two 'sub-policies' - spending and taxation.

Spending
The more a government spends in social welfare, the more equitable income distribution will be (obvious). General increases in spending, i.e. expansionary fiscal policy, tends to reduce unemployment. A reduction in unemployment largely impacts lower income earners, because they tend to be the section of the labour force prone to cyclical unemployment, while higher income earners are less affected.. As such, expansionary spending to reduce unemployment tends to improve income distribution.

Taxation
Progressive taxation systems (taxing higher income earners at a higher rate), adopted by most of the world, improves income and wealth distribution significantly. The more progressive a country's adopted taxation system, the lower the GINI co-efficient (0 gini co-efficient is perfectly equal income distribution). Conversely to before, contractionary fiscal policy, such as lifting tax rates, disproportionately impacts lower income earners, because rising unemployment blah blah blah.

Fiscal policy has a very dramatic impact on income distribution. Above is only some of the impacts.

tyty, lahb u long time <3

 

[Cleavage]

tyty, lahb u long time <3

Hahaha no problem

 

[Fawun]

cleavange band 6 economics

 

[anomalousdecay]

cleavange band 6 economics

Even I knew what it did to an extent.

However, I was bad at communicating it and having not studying for it until the day before the HSC exam, I just winged it with my common sense. It got me nowhere and I guess I can say that trying to communicate in eco with incorrect terminology and a science short answer style for everything got me a band 4 which the markers gave as some sort of confusion towards what I wrote and why it was 8 pages long per essay (srs).

So yeah make sure you use the right terminology as any one with half a brain can write a bunch of random points about fiscal policy affecting income distribution (I'd say the 2012 and 2013 budgets did affect income distribution to a certain extent (albeit most of the labor budgets were targeted on income distribution iirc)).

Have no idea about 2014 budget because I haven't bothered to look at it. More precious time to be used for something else.

 

[Cleavage]

cleavange band 6 economics

the struggle is real