Financing of Government Expenditures
Main article: Government revenueGovernment expenditures are financed in three ways:
- Government revenue
- Taxes
- Non-tax revenue (revenue from government-owned corporations, sovereign wealth funds, sales of assets, or Seigniorage)
- Government borrowing
- Printing of Money or Inflation
- Privatization
How a government chooses to finance its activities can have important effects on the distribution of income and wealth (income redistribution) and on the efficiency of markets (effect of taxes on market prices and efficiency). The issue of how taxes affect income distribution is closely related to tax incidence, which examines the distribution of tax burdens after market adjustments are taken into account. Public finance research also analyzes effects of the various types of taxes and types of borrowing as well as administrative concerns, such as tax enforcement.
Read more about this topic: Public Finance
Famous quotes containing the word government:
“I wish my countrymen to consider that whatever the human law may be, neither an individual nor a nation can ever commit the least act of injustice against the obscurest individual without having to pay the penalty for it. A government which deliberately enacts injustice, and persists in it, will at length even become the laughing-stock of the world.”
—Henry David Thoreau (18171862)