Government & Taxation test, yo!

Part I. Final Manifesto
           At first, I believed the government needed to get heavily involved with their role in the US economy. And right now, I still think they should get a little handsy. It's an unfortunate reality, that in order for us to even break even, we need an overhaul, a change in how the government brings in revenue. I still strongly believe that there needs to be taxes for everyone, that everyone who has an income needs to pay a certain percentage of taxes. I think spending has to be moderated heavily. We have to look at our budget realistically. We can't be spending $10 on something that could be bought at $8 and expect our big brothers (China) to lend us the extra $2 as a loan. It just can't work that way. Especially if we're buying, lets say, tons of candy with our grocery money and not getting everything that was originally on our list. We're spending too much on things we don't necessarily need right now.
           I know that social security and medicare is racking up a lot of our debt because the baby boomer generation is retiring, and since they are retiring, right now is when we really need to start collecting more taxes. And slowly, the government can decrease the rate of taxation so we don't theoretically milk the cow dry. I also don't think that the government should be doing any major bailouts right now, we can't afford it, and if a business can't survive right now then how will it survive later? If we cut the corporate tax and find another way to tax the country (addressed in part III) then perhaps more businesses will return so the effect of jobs lost from companies that go under will be relatively small.
Part II. The Federal Budget
          Looking at the given pie charts on revenues and expenditures, it appears that social security brings in  36% of the revenue, but the government only spends 20% of their money on social security. Perhaps, going out on a limb here, 20% of the revenue collected is going back to social security, while the other 16% is going to medicare, and the income taxes make up the other 9%. That leaves 38% from the income taxes, and 17% from other revenues. We spent over $1,295 billion from what we could afford to spend in 2011Seeing that discretionary spending makes up 18, just 2% lower than social security and 5% lower than medicare, it's quite obvious that there needs to be some cuts happening. Like I said above in the part I, this country's spending habits need to be addressed as well as taxing to bring in more revenue.
           I disagree that energy has been put so low on the totem pole in discretionary spending. We could definitely cut a lot of spending on international assistance. I think it's important that we handle domestic issues before we handle any international issues, and the economy is obviously a huge domestic issue. Also I think we need to cut Defense spending by perhaps, 5%, pull out of a good portion of our international bases, like Germany (I'm pretty sure the Nazis are all gone) and other ally countries. If this happens we can cut the Veterans Affairs discretionary spending by a lot, considering we would be cutting the amount of people in the military. In summary, we need to adjust where our revenue, by bringing in more income tax, we need to cut spending, and change our view points on what we should put our money towards more.
Part III. Personal Taxation: Select one of the personal tax plans we've studied and create a persuasive argument for it. Explain why you can support this tax. Add any details of how the tax would function, or any reforms you'd like to see made. 
          I believe the best form of taxation right now would be a VAT tax. The VAT tax is a tax that is placed on a product whenever value is added at a stage of production and at its final sale. So in a sense, at each stage the company of said product or the company that is adding onto or changing said product pays a tax. Eventually, they are reimbursed this tax. You could say it acts as a stimulus for the companies. This tax is also much more flexible than the flat or national sales tax. As an example, most of Europe partakes in the VAT tax and their tax fraud is at 13% while the United States is at a very high 40%.
          I would propose that the VAT replace the corporate tax. This would hopefully bring companies back to the states that are trying to escape this taxation and bring in more jobs. The VAT would be set at a rate between 15-25%. We would revert to the old income tax brackets at 3,4, and 5%. There would be tax breaks on groceries (unprepared food) and medicine. Now, some people may think the wealthy will benefit due to the low income tax, while the lower class will take a heavy blow because ultimately the consumer is the one who bares the biggest burden. But, as far as the wealthy goes, the things they want and are capable of buying are now much more expensive, for example, a car. It's going to cost a lot more for them to buy than it did without the VAT. As for the lower class, they will have slightly more money because of the lowered income tax, and there are tax breaks on things they need in order to survive. They will just have to keep the skills or learn how to prioritize their spending. This tax ultimately promotes wise spending, savings and investments. I don't think this will revert to lesser spending though, because of the taxes, people ultimately will have to buy clothes, supplies for school or jobs, etc., that the spending done then will balance perhaps the lessened spending in the economy. Also, this would not be a hidden tax, it will be on the price tags of the products to show exactly what percent of this product is taxed and ultimately the final purchase price.
Part IV. The National Debt Crisis: What is your solution to the debt crisis our nation is in and how does this fit into your manifesto? Supplementary information is also on today's Maccanomics blog.
         Well, I'd have to say that if we stop using the progressive tax, because it's quite clear that it's not working, and apply my proposed theory of the VAT tax, as well as change our priorities as far as spending goes, perhaps we can finally break even at some point in the near future. I honestly think that what it really comes down to is collecting more revenue, because as of right now 47% of Americans don't pay taxes, and to cut back on spending and change what we spend our money on.

           Now this breakdown was assessed quite sometime ago, as the national debt was only $14.3 trillion. But I think the main point of this shocking assessment of our nation's debt still remains. And that is that we are spending too much, not cutting enough, and not taking nearly enough revenue in order to spend the way we do. This goes along with my manifesto, in that the government has to see past the lobbyists, the selfish desires, and get down to the fact that there are things that we want, there are things that we need, and if we want to pay for a balance of what we need and what we want, we have to tackle this balance and collect the appropriate revenue to spend on our wants and needs. Revenue, is obviously, raising the taxes, and possibly using my proposal for what I believe is the right form of taxation, cutting spending and prioritizing our needs, as said in my manifesto, and keep this habit going. Even after we get out of this debt, and to stick with this plan. Because this debt is going to take sometime to fix. 

Part V. EXTRA CREDIT: 

• approximately two thirds of the federal budget consists of mandatory spending (spending authorized by law that continues without the need for annual approvals of Congress) - interest payments, Social Security and medicare
• one third remaining of the budget is the discretionary spending 
• the federal budget is prepared for a fiscal year (12 month financial planning period that may or may not coincide with the calendar year) 
• first step on developing budget is executive formulation (the president establishes the general budget guidelines for a multiyear period)
• by law, the federal budget must be sent to both houses of Congress by the first Monday in February
• The president's budget is only a request to Congress, they have the power to approve, modify or disapprove of the proposed budget
• House sets initial budget targets for discretionary spending
• Once those are set, the House assigns appropriations bills to various House sub-committees, breaking down the budget into 13 smaller ones
• Appropriations bill is an act of Congress that allows federal agencies to spend money for specific purposes. 
• The deadline for completing this part of the process is September 15
• The Senate receives the budget after the House approves it. The Senate may approve the bill as sent by the house or draft its own version 
• Both House and Senate seek advice from several government bureaus and offices
• the House and the Senate approve the compromise bill and then send it to the president for signature 
• The president can veto the bill and force Congress to come up with a budget closer to the president's original version 
• The budget become official document once signed by the president for next fiscal year that starts on October 1
• The largest category of federal spending is on Social Security
• it is mandatory though
• 
  

1.

The track stars have to pick up the slack from the others because they can't properly perform. Basically, because such a large number of Americans don't pay a progressive tax, those who do, have to pay much more than if everyone contributed. 

2. 

What I meant by this analogy is that the Games are supposed to be equal; every tribute has the ability to win. Which is true, but most of the times the ones that are well off (the Careers) who also secretly train from a very young age usually win, which is similar to the wealthy in this situation. 

3. 

Some families have this sort of method, where each swear word costs a quarter or something. I was somewhat relating to the Spongebob episode where he and Patrick discover swear words and presume to use them as 'sentence enhancers'. They had a great time do it, but they paid for it socially with appalled peers and Mr. Krabs made them paint his mom's house.

4. 

In telephone the sentence or phrase keeps getting added onto because people aren't hearing it right. It gets discombobulated and such until it gets back to the owner of said sentence and they're in shock because it's completely not what they said. Just like VAT, taxes are added on until it reaches the consumer not at the correct price at all, due to all the taxation. 

tax analogies wooh.

1. Progressive tax is like having a bunch of out of shape people in a relay with two varsity track stars.
2. Flat tax is like the Hunger Games; supposedly, everyone has just as much as a chance to win as the next.
3. National sales tax is like a swear word jar; you can say whatever sentence enhancer you please, but it'll cost you a shinny penny each time you do.
4. Value-added tax is like telephone; each person adds on to and tweaks the phrase making it more weird until it's said allowed and is usually much worse than the original sentence.

Progressive? not at the moment.

To be honest, it'd be great if we didn't have to pay taxes. If we could have the money we earned not be hacked away at to leave us with less than what we've made. But, for everything that the government does, someone has to pay them to do it. We're benefiting from these programs, services, goods, whatever you want to call them. We're benefiting. Therefore, if you benefit, you should pay. I mean, it's as simple as that. That's why I believe, that as of right now, the way we tax isn't getting us anywhere. We need to tax everyone. Even if the amount is small for the poorer class, as an example, anything counts. I still say that the more you earn the more you pay should go too, I mean it's just an unfortunate fact. Until we get out of our debt, until we have a balanced budget we need to tax everyone. Or we need to cut programs, but as Americans, we want everything but want to pay very little, if at all,  for it.

In conclusion, I don't think the progressive theory works. We need to tax everyone, not so much for people that they can't uphold an average way of living (food, shelter, water, clothes, etc). But I do think that the more you earn, the more you pay.

Personal Manifesto- it's great because it's personal

To be quite honest, I was very confused during our discussion in class. We were talking about would you be comfortable with the government having a "heart farm" or giving money to the arts. I mean to be quite honest, my question to that is: who else would? I mean really, I wouldn't put my trust into a private company nor do I expect a private company/individual to give large sums of grants every year or so to general things like arts, sciences, education in general. I think at an individual level, let's say you own a small business, I don't think the government should compensate for every single one that goes under, because it effects such a small amount of people. I definitely think we need to raise taxes. I think the mentality of Americans is that they want this, this and this, but they want to pay for it with a few pennies and it has to be done overnight. It just is unrealistic, and if we're going to get out of this debt, if we're going to get our economy back up, we need to raise taxes. On everyone, not just the rich, though I do think that they should pay a little more since there are people who can't afford to pay taxes. I also believe that the government should continue to supply services, such as public education, and now healthcare. I mean to be quite honest, look at Canada. They're doing just find, and they're not a bunch of crazy socialists out to bring down freedom, liberty and all else America stands for.

As of right now, our current situation, we need the government to get a little handsy. We need someone, or some people, who know what they're doing to step in and get us back on our feet.

discuss ALL the demands

We've been discussing a few different topics in economics lately, and to name a few: complementary, substitute, inelastic, and elastic demand. Sometimes it's hard to relate in class notes and lectures to the real world. LUCKILY, economics is a class based on the real world. In order to make learning a bit easier on myself, I have compiled a list of examples from the above topics and explain why they are important to me and why they're correct.

Firstly, an example of complementary demand in my life would be buying a canvas and a set of paints. You cannot create art without paint but if you have nothing to paint on then the paints are useless. Complementary demand is like the-milk-to-my-cookie; when you have one you need the other. Therefore, I have a canvas, so I need to paint to create my art.

Secondly, an example of substitute demand in my life would be my iPad to my iTouch. Now, I know most people believe them to be very similar, basically the iPad being a larger version to the iTouch, so why is the iPad a substitute? My iTouch is very easy to carry around, and at night I like to listen to music before I sleep. Seeing as the ability to listen to music on that device is unavailable to me, I have to use my iPad to complete this service. It has the same quality when producing the sound of the songs I play comparatively to my iTouch, however, it's so much bigger and more awkward that it does become a hassle. This would be an imperfect example of a substitute good. It is imperfect because I, as the consumer, is not fully satisfied with the service/good as I need it to be.

Thirdly, an example of inelastic demand in my life would be Ginger Ale. No matter how the high the cost of Ginger Ale, I guarantee you I will buy it. My love for Ginger Ale will not shake me, as a consumer, to stop buying this good. This is a correct example because my demand does not increase or decrease with the change in price of this product.

Fourthly, an example of elastic demand in my life would be clothes. I am not going to purchase an eighty-dollar shirt (unless it has an affiliation with Pokemon, The Hunger Games, or Harry Potter) when I can buy two-three outfits in the clearance section for the same price. I know this may not be cut and dry elastic demand because I'm still buying the product, but I am getting more bang for my buck. The essential point to this is, the more expensive an article of clothing is, the less likely I will purchase it.

Opportunity Cost

For the past few months, I have been getting back into the swing of practicing playing my guitar. I do this for anytime between 15 minutes to 2 hours every night. As you can see, the range of an opportunity cost is quite wide. Therefore, I have come up with multiple option B's that are of equal value. I could be studying, although, I don't consider that something I would do in my free time but it is an option that sometimes I do choose and is quite valuable. I could be spending more time with my numerous pets by playing with them, walking them, cleaning their cages more often than once a week. I could also clean, which depending on if I'm doing a full room clean or just my desk, or closet, could take minutes to hours to days. However, this isn't as valuable of an option because I work in an organized by messy environment and it suits me well. I would only choose this option if an outside source was impacting me to choose so (mother). Another option would be hanging out with friends, which I haven't done most of my high school career and have been trying to do a lot of this year. All of these options would be valued as time: how much time do each of these require and how does that correlate to the time I spend practicing on my guitar.