1. Economic Role of Government
Provide Public Goods
Promote Competition
Redistribute Income
Correct Market Failures

3. Government Tools Fiscal Policy Monetary Policy Taxing Spending
Regulate the Money Supply
Control Interest Rates

5. Types of Taxes Income Other Types
Progressive
Proportional
Regressive
Excise Property School Tolls Medicare Social Security

6. Does income redistribution make the economy less efficient?

7. Yes, but is that bad?

8. The Micro Connection Shifting the Supply Curve Tax Subsidies
Price Floors and Ceilings
Per Unit Taxes- impacts the MC curve
Lump Sum Taxes- impacts AFC and ATC curves
Marginal Social Costs
Marginal Social Benefits
Externalities

9. Fiscal Policy Goals Steady Growth (GDP)
Stable Prices (Inflation- CPI, PPI)
Full Employment- frictional and structural
But how should we prioritize?

10. Adam Smith’s Theory of Good Taxes
There is no art which one government sooner learns of another than that of draining money from the pockets of the people.
The Wealth Of Nations, Book V Chapter II Part II, Appendix to Articles I&II, p. 861, para. 12.

11. Fairness Progressive Income Tax
As Income Level increases; % taxed increases

12. Clarity

13. Convenience of Payment

14. Ease of Administration

15. Flexibility

16. Your job- Create a fair plan
Who/what to tax?
Progressive income
If below poverty level regressive
Corporations that pollute
Unhealthy food
Bridges
What to spend money on?
bridges