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:
“It has been the struggle between privileged men who have managed to get hold of the levers of power and the people in general with their vague and changing aspirations for equality, for justice, for some kind of gentler brotherhood and peace, which has kept that balance of forces we call our system of government in equilibrium.”
—John Dos Passos (1896–1970)