As you know, in the United States, the government provides direct and indirect subsidies to several economic activities in both production and consumption. For instance, farm subsidies target the production of certain crops while Food Stamps (or Supplemental Nutrition Assistance Program, SNAP) are directed at the consumption of food. In addition, our tax codes are intended to raise revenue while encouraging some activities and discouraging some others. The deductibility of the interest paid on student loans and mortgages and personal medical expenses could be regarded as subsidies toward investment in education, purchase of homes, and consumption of medical care, respectively. Taxes on cigarettes and alcoholic beverages are, in part, intended to discourage the consumption of these consumer goods. Utilizing your knowledge of the consumer theory, analyze the economic and social implications of these policies.
- Are these programs/policies economically and/or socially justified?
- Are they adequately serving their purposes?
- Should they be expanded or curtailed?
- Are there better ways (less costly or more efficient methods) to achieve their objectives?
Note: While you could address the issues related to taxation and subsidies from a general perspective, I suppose, in a short essay, you might be able to make a more effective argument if you would focus your attention on a specific policy or program. Be sure to address the above questions in your essay.
As you know, in the United States, the government provides direct and indirect subsidies to several economic activities in both production and consumption. For instance, farm subsidies target the production of certain crops while Food Stamps (or Supplemental Nutrition Assistance Program, SNAP) are directed at the consumption of food. In addition, our tax codes are intended to raise revenue while encouraging some activities and discouraging some others. The deductibility of the interest paid on student loans and mortgages and personal medical expenses could be regarded as subsidies toward investment in education, purchase of homes, and consumption of medical care, respectively. Taxes on cigarettes and alcoholic beverages are, in part, intended to discourage the consumption of these consumer goods. Utilizing your knowledge of the consumer theory, analyze the economic and social implications of these policies.
- Are these programs/policies economically and/or socially justified?
- Are they adequately serving their purposes?
- Should they be expanded or curtailed?
- Are there better ways (less costly or more efficient methods) to achieve their objectives?
Note: While you could address the issues related to taxation and subsidies from a general perspective, I suppose, in a short essay, you might be able to make a more effective argument if you would focus your attention on a specific policy or program. Be sure to address the above questions in your essay.
