Tax Revenue During Recession - Assignment Example

Comments (0) Cite this document
The paper "Tax Revenue During Recession" highlights that during a recession, unemployment benefits are increased, which automatically stabilize the economy and this practice is being exercised for the last sixty years and this is the reason that no severe recession has been observed…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97% of users find it useful
Tax Revenue During Recession
Read TextPreview

Extract of sample "Tax Revenue During Recession"

Is the author correct in arguing that the requirement of an annually balanced budget would tend to destabilize the economy? Explain.
Ans) Yes, the author is correct in arguing that the requirement of an annually balanced budget would tend to destabilize the economy because according to the new amendment tax revenue will be increased in time of recession to restore the economy. This aspect of the amendment would be likely to make default crises more frequent; when a budget that is balanced at the start of the year falls out of balance during the year due to slower-than-expected economic growth or other factors beyond policymakers’ control, default could threaten if cuts large enough to restore balance can’t be passed swiftly and it proves impossible to secure a three-fifths vote to raise the debt limit. By the same token, the balanced budget amendment would not only undermine the automatic stabilizing function the federal government plays but would push in the opposite direction by requiring greater retrenchment when the economy falters. As a consequence, the constitutional amendment is likely to make recessions more frequent and deeper. The amendment also would increase the risk of a government default. It has often proved difficult to amass a simple majority in Congress to raise the debt limit so an impending default could be averted. The constitutional amendment also undermines majority rule, the basis for our democracy. The amendment would essentially enable minorities to engage in a form of extortion; they could threaten to plunge the nation into serious fiscal difficulty by refusing to help provide a three-fifths vote to waive the balanced budget requirement and raise the debt limit when a recession loomed, unless they were granted concessions on major policy issues as the price for their votes. A recent CBO study found that if deficits are held to two per cent of the Gross Domestic Product through 2030, we will experience solid economic growth, and younger generations will be substantially better off than current generations. In fact, CBO found little difference in growth rates between such a policy and a policy of balancing the budget every year. 
 f an annually balanced budget is required, would automatic stabilizers still exist?
Ans) if an annually balanced budget is required, automatic stabilizers would not exist because in times of recession tax revenue will be increased which is opposite of Automatic Stabilizers. To support this phenomenon the writer says, “One of the key reasons we have had no depression and few severe recessions during the past 60 years is that what economists call the "automatic stabilizers" — reductions in tax collections and increases in unemployment insurance benefits and means-tested entitlement benefits — automatically kick in when the economy weakens and unemployment climbs”. Read More
Cite this document
  • APA
  • MLA
(Tax Revenue During Recession Assignment Example | Topics and Well Written Essays - 250 words, n.d.)
Tax Revenue During Recession Assignment Example | Topics and Well Written Essays - 250 words. Retrieved from
(Tax Revenue During Recession Assignment Example | Topics and Well Written Essays - 250 Words)
Tax Revenue During Recession Assignment Example | Topics and Well Written Essays - 250 Words.
“Tax Revenue During Recession Assignment Example | Topics and Well Written Essays - 250 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Tax Revenue During Recession

UK economy during 2008 recession

...Explain what UK government has done during 2008 recession using monetary and fiscal policy. The UK came into recession after hike in international oil prices that adversely affected UK’s trade bill and resulted in subsequent increase in energy prices within UK. The rapid increase in production costs due to higher costs of doing business resulted in inflation; thereby reducing consumer purchasing power and real incomes. For instance, the consumers sharply cut down their spending amid low real incomes, which led to negative GDP growth, aggregate consumption, production and saving (BBC Article, 2008). It is worth mentioning that decline in consumption has direct adverse impacts upon...
4 Pages(1000 words)Essay

Strategic Management for FMCG Market During Recession to make as much revenue as possible. Consumers are the king; if they do not purchase products, companies would be losing a lot of money. So it can be stated that consumers have more bargaining power during this recession. This is supported by the findings from the primary research. Change in consumer behavior is more clearly realized by the retailers. It is observed during the course of primary research that almost 92% retailers have admitted that there has been a significant change in consumer behavior during the past two years. Suppliers’ Bargaining Power: Suppliers generally have significant amount of bargaining power as every business requires...
60 Pages(15000 words)Dissertation

Training during global recession

...TRAINING DURING GLOBAL RECESSION A report on the advisability of reducing training programs during recession Introduction There is currently an unfolding global economic recession that has eroded the confidence of business to pursue its long-term visions and strategies. There is an immediate resort to caution, consolidation, and cost-cutting, the last often pursued as a knee-jerk reaction to the prospects of reduced revenues and unrecouped expenses. Cost centres in companies come under immediate scrutiny, and foremost among these cost centres is the human resources development programmes. Seen as not directly income generating,...
10 Pages(2500 words)Essay

Personal Income Tax and Revenue Forecasting

...PERSONAL INCOME TAX Personal Income Tax and Revenue Forecasting Word Count: 1000 (4 pages) When the Soviet bloc broke up in the early 1900s, the Republic of Vardar declared its independence. As the country established a monetary system, democratic processes, and a controlled fiscal system, the early problems of hyperinflation, unemployment, and declining standards of living slowly subsided. In late 1997 the country initiated a personal income tax, heavily dependent on taxes withheld by large employers on wages and salaries, but still broad in coverage. The country has been collecting about 30 percent of its tax revenue from that tax, although a law passed in 2000 is expected to reduce personal income tax collections by 25 percent... in the...
4 Pages(1000 words)Assignment

Personal Income Tax and Revenue Forecasting that particular period. For instance, during the month of December the country registers the highest level of revenue collection. This could be contributed to the festive season that accompanies the month of December, which means a lot of people engage in activities that increase the revenue that businesses make. A high revenue on the part of the businesses means that they will make high profits that are to be taxed by the government at a given rate. If the profits are high, then the government is going to collect high tax revenue in that period which contributes to a large revenue collection. The...
5 Pages(1250 words)Research Paper

Unemployment during the Great Recession

...Unemployment during the Great Recession The recession that has been recently experienced by the US has a negative impact on the financial, social and psychological side of every US citizen. The main area where the recession has caused very heavy damage is the area of employment. Although, during this period, organizations have gained heavy profits but they have to provide good quality jobs to the citizens of the US. The job market scenario since the start of the recession is such that there is little to zero job security, the pay rates and the conditions for working are its worse. According to the Iowa Policy Project, out of the total US...
2 Pages(500 words)Assignment

The UK Borrowing and Tax Revenue

.... For both 2011 and 2012 the tax revenues are approximately stable but there are hikes in February this is because it reflects sales revenues generated during the holiday season. Higher rates reflect a higher spending rate. (Dries 2014, par.3) Conclusion From the the provided data, it is evident that there in correlation between the borrowing rates and tax revenues. However, there seem to be a trend in both tax and borrowing which can help in forecasting future rates. One year data also seems to affect the next years data for both tax revenues and Borrowings. Although the correlation...
4 Pages(1000 words)Assignment

Losses jobs during the recession

.... Those mothers that are no longer employed would rather do the house work than employ house maids. All these developing trends due to the recession are resulting to inequality. The great depression crashed the stock market. This affected the wealthy and the middle class families greatly. Additionally, more people lost jobs and more are on the verge of losing top and well-paying jobs. For example, the study by Leonhardt (2009) reveals that the recession affected the Wall Street employees and so a large percentage of them lost their jobs. In a bid reduce inequality, the Obama administration has taken a stem that franklin Roosevelt took during the 90s depression of increasing the...
2 Pages(500 words)Essay

Undertake Investments During Recession

...Undertake Investments During RecessionRecession refers to a period of low economic activity or a general slowdown in economic activity. The National Bureau of Economic Research (NBER) coined the above definition. In addition, recession describes the decline in the economy and that lasts for several months. Negative economic growth can act as an indicator for a recession within a period of two or more consecutive quarters. The U.S experienced recession during the 2008-09 global economic crises that occurred as a result of risky investment strategies. The U.S suffered a major setback and had to develop numerous economic...
2 Pages(500 words)Essay

Policy Responses during the Great Recession

.... This was because the financial institutions wanted to raise funds that would enable them to remain in operation after the economic recession period (USC Price, n.p). The major policy initiatives that were implemented by HUD during the Great Recession era included increase home ownership by supporting various programs such as Fannie and Freddie, State HFA, Emergency Homeowners Loan Program and First-time homebuyer Tax Credit among others (USC Price, n.p). The purposes of supporting such initiatives were to offer financial assistance to the citizens to enable them either buy homes or settle debts. The effects were to maintain the circulation of money to avoid inflation...
2 Pages(500 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Assignment on topic Tax Revenue During Recession for FREE!

Contact Us