Questions and Answers

Respond to the following in a minimum of 175 words:
• Discuss how economics plays a vital role in shaping public discussion in the following policy areas:
• Household taxation
• Business taxation
• Import taxation (tariffs)
• Provide several examples of how economics plays a role in policy or public discussion related to your career. Why is understanding economics important for you?

ANSWER

Government policy on components such as taxation has microeconomic effects where its implementation or lack thereof interferes with the inputs and incentives for economic decisions including those of individuals and entire governments. In turn microeconomics analyses the mechanisms of the markets that establish the prices of goods and services allocating resources to specific vital parts of the economy. Governments use taxes as a means to generate revenue, discourage certain behaviours and trends to reduce inequality and distribute resources.

Household taxation comprises taxpayers and individuals included under the dependency of one tax return. It could include a tax household with a spouse, children or dependants. However, households do not include individuals living in the same house but fiscally independent. A good example is students. Instead, these individuals are counted in the households they come from or declared as dependants. Homeless people and people living in collective dwellings are also excluded from household taxation.

Business taxation comprises taxes that businesses must pay to the government to operate in a certain geographical location. All sorts of businesses including sole proprietorship, limited liability and corporations are mandated to pay business tax. In the economy, business taxation is vital in ensuring the distribution of resources across states.

Import taxation, duty or tariffs are taxes imposed ion imports at customs. The value determines the amount on tax and can also be referred to as customs duty. This kind of taxation is important for governments in enabling resource distribution and protection of local industries. For instance, if local production faces competition from imports, then a government could opt to raise the customs as a way to make it difficult to import and thus more sales for local producers and distributors.

References

Salanie, B. (2011). The economics of taxation. MIT press.