ABSTRACT
The Government of the community will spend the money collected from the increment in the income tax which has been imposed, on determinate objects, such as defence, justice, etc.; and that the quantity of money spent on each one of these objects will itself be determinate. This chapter distinguishes the two different forms which may be taken by governmental expenditure financed by the tax. Firstly the Government may provide certain additional services, for example medical and health services. On the other hand, the Government may distribute part of the proceeds of the income tax in the form of old-age pensions, for example, or in payment of sickness benefits to workmen. The influence of the income tax in altering the consumption of divisible goods and the demand schedules for them in the short period. The Government collects from the income tax it disburses to the poorer sections of the community, as, for example, in old-age and other pensions.
