ABSTRACT
Fiscal policies create incentives, distribute burdens and benefits, and trigger effects. Policy makers hope that intentions shape consequences. Public finance research shows the compelling force that variations in conventional and nonconventional tax and expenditure legislation can have for people at all levels of the economy. Economists, political scientists, and public administrators have found the traditional analytical public finance task a complicated one. Fiscal policy may not have the impact economic planners desire because monetary policy designs also exist to neutralize, mitigate, or intensify the effects fiscal policies have. When public economists speak of taxes, they often conceptualize them into lump sum, consumption, and means taxes. Once they choose a base combining income, consumption, and wealth to reach the goal of horizontal equity, tax policy makers confront the vertical equity problem. The efficiency principle rests on eliminating economic distortions or making tax systems neutral in their economic effects, neither encouraging nor discouraging changes in behavior.
