Public Finance and Full Employment

Public Finance and Full Employment

Public Finance and Full Employment

Public Finance and Full Employment

Excerpt

CONTENTS

PAGE

PREFACE Inside Front Cover

FISCAL POLICY, STABILITY, AND FULL EMPLOYMENT RICHARD A. MUSGRAVE1

Why Fiscal Policy?1

Total Expenditures and Level of Employment1

Role of Fiscal Policy5

Alternative Budgets for Full Employment7

Adjusting Revenue and Expenditure Structures7

Deficit: Higher Expenditures vs. Lower Taxes8

Balanced Budget: Higher Expenditures and Higher Tax Yield12

Short and Long-Run Budget Planning14

Basis for Planning Public Expenditures14

Long-Run Budget Planning15

Short-Run Adjustments16

Fiscal Policy in a Broader Program17

Fiscal Policy and Other Approaches18

Fiscal Policy and Private Enterprise18

FEDERAL TAX REFORM RICHARD A. MUSGRAVE22

Economic Requirements for Tax Policy22

Revenue Structure and Size of Deficit22

Level of Yield24

Minimizing Tax Deterrents to Consumption25

Taxes from Personal Income25

Taxes from Business Income28

Minimizing Tax Deterrents to Investment29

Supply of Savings29

Investment Incentives and High Bracket Rates30

Investment Effects of Personal vs. Corporation Taxes31

Loss Offset32

Averaging of Income over Time34

Capital Gains35

Small and New Enterprises36

Tax Exempt Securities37

Incentive Taxation37

Taxation of Idle Balances38

Taxation of Idle Income39

A Flexible Tax Policy41

Elasticity of Yield41

Adjustability of Rates42

Place of the Corporation Income Tax43

Integration of Personal and Corporation Income Taxes44

Corporation Tax and Alternatives46

Is the Corporation Tax Shifted?47

Corporation Taxes for Industrial Control48

Outline of Revenue Program48

Timing of Rate Reductions48

Yield Composition49

Further Considerations52

PUBLIC DEBT AND NATIONAL INCOME EVSEY D. DOMAR53

Debt as an Instrument of Fiscal Policy53

Effects of Debt Changes on Income53

Debt and Fiscal Policy54

Secular Expansion of the Debt54

Importance of Relative Magnitudes55

Relation between Debt and National Income56

When Income Remains Constant56

Growing Income57

Numerical Magnitudes58

Implications for Fiscal Policy59

How Can a Rapidly Rising Income Be Achieved?60

Productive Capacity and Realized Income60

Need for Technological Progress61

Cyclical Drop in Income62

Declining Rate of Growth63

Effects of a Growing Debt on Distribution of Wealth and Income64

The Argument64

Comparison between Public and Private Investment64

Average Rate of Return65

Source of Property Income66

Summary68

MONETARY ASPECTS OF NATIONAL DEBT POLICY ROLAND I. ROBINSON69

Monetary Expansion during the War70

Inflationary Potential of Present Debt Structure72

Easy Access of Banks to Reserves73

Insecure Ownership of Government Securities73

Critical Matter Is Not Interest Rates Alone73

Practical Considerations in Public Debt Planning76

Proposed Changes in Public Debt Structure77

Public Debt in the Banking System77

Other Holders of Government Securities79

Credit Policy with Proposed Debt Structure81

But What about Deflation?82 . . .

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