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CHAPTER 1

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  1. CHAPTER 1 INTRODUCTION

  2. Defining the Field of Study • Public Finance/Public Sector Economics/Public Economics – the field of economics that analyzes government taxation and spending policies

  3. Public Finance and Ideology • Organic view of government • Mechanistic view of government

  4. The Legal Framework • Federal government • Federal Constitutional provisions – may effectively undertake any expenditure it wishes and use debt and taxes to finance them. • 16th Amendment empowers the federal government to tax personal income.

  5. The Size of Government • How to measure the size of government • Number of workers • Annual expenditures • Types of government expenditure • Purchases of goods and services • Transfers of income • Interest payments • Budget documents • Unified budget • Regulatory budget

  6. State, Local, and Federal Government Expenditures (selected years) Relative to Economy Adjusting for Inflation Adjusting for Population

  7. United States

  8. Note increase in Social Security, Medicare and Income Security Note decline in Defense

  9. Increase in public welfare Decline in highways

  10. Social insurance and individual incometax have become more important Corporate and othertaxes have become less important

  11. Individual tax more important Property tax less important

  12. Doing Research in Public Finance • Public Finance journals • International Tax and Public Finance • Journal of Public Economics • National Tax Journal • Public Finance • Public Finance Quarterly • General-interest journals • American Economic Review • Journal of Economic Perspectives • Journal of Political Economy • Quarterly Journal of Economics • Review of Economics and Statistics

  13. Doing Research in Public Finance • Other sources • Journal of Economic Literature • Brookings Institution’s Studies of Government Finance • Congressional Budget Office reports • National Bureau of Economic Research working papers • Tax Foundation’s Facts and Figures on Government Finance • U.S. Government Printing Office publications • Statistical Abstract of the United States • Economic Report of the President • Budget of the United States • U.S. Census of Governments • Historical Statistics of the United States from Colonial Times to 1970

  14. Doing Research in Public Finance • Public Finance data available on internet • Resources for Economists on the Internet • U.S. Census Bureau • University of Michigan’s Office of Tax Policy Research • Urban-Brookings Tax Policy Center