Introduction Will provide framework for thinking about the normative and positive aspects of government income redistribution policy

Introduction Cost-benefit analysis is a set of practical procedures for guiding public expenditure decisions

Optimal Commodity Taxation Assume that the goal is to finance expenditures with a minimum of excess burden. Assume lump sum taxes are infeasible 3 commodities: Good X. Y, and leisure

Introduction There is substantial dissatisfaction with the federal personal and corporate income tax systems. One possibility is to adopt a consumption tax whose base is actual consumption. Another possibility is a tax on wealth, whose base is accumulated saving

Introduction Besides taxation, the government's' other major revenue source is borrowing. In this lesson, we will: Discuss problems with measuring size of debt Who bears the burden of the debt When is borrowing a suitable way to finance government expenditure

Introduction A corporation is a form of business organization in which ownership is usually represented by transferable stock certificates -Stockholders have limited liability Corporations are independent legal entities · Can make contracts, hold property, incur debt, sue, and be sued

Introduction A key policy question is how do households respond to the incentives presented in the U.S. tax code? We will examine: Labor supply -Saving Housing Portfolio Composition

Introduction Many policies center around whether the tax burden is distributed fairly. Not as simple as analyzing how much in taxes each person actually paid, because of tax-induced changes to price

What's Special About Health Care? Health care costs are large and growing fast Number of reasons why First Welfare Theorem may be violated Poor information(physician induced demand) Adverse selection and moral hazard Disease externalities

Social Insurance Programs Generally share 4 characteristics: Participation is mandatory Eligibility and benefits depend on prior contributions Benefits begin with an identifiable occurrence Programs are not means-tested