Fiscal Policy

Fiscal Policy

GROUP A:

B. The Laffer Curve demonstrates tax rate vs. tax revenue. In the middle of the curve, there is a point that maximizes tax rate and tax revenue, however, if the government goes beyond that point, they are minimizing their tax revenue. A basic scenario relating the Laffer curve to an everyday situation is Christmas. Say, Santa (your mom/dad) was going to give you 100 presents for every 100 people you made happy. Over time, he gradually decreased this amount to 50 per 100 people. Then to 25 per 100 people and so on and so forth. Your willingness to continue to be kind slowly reduces. Another example is a teacher giving you points for an assignment. On day one, they offer 100 points, on day two 75, on day three 50… Your willingness to turn in the assignment decreases. A final example would be another holiday, Halloween. Say your parents take 10% of all of your Halloween candy – the odds are that you would still trick-or-treat. If they took 49% - odds are you would still trick or treat. However, the moment they take 51% and your benefits are no longer clear, you would most likely not trick or treat. The Laffer Curve can be a simple concept when related to easy situations and scenarios.

GROUP B:

4. Lobbying and special interests are the attempt to influence political parties to support a law or policy that benefits a specific organization. Usually this influencing comes in the form of campaign funds from private organizations and businesses. This creates an unfair situation where the bills and policies that receive lobbying backup are passed and those who don’t fall behind the shadows. This defeats the purpose of a democracy and essentially runs elections on a pay-to-play basis. A simple solution would be to only allow public funding of elections and voting.  In lamens’ terms, from cleanupwashington.org, “Candidates collect an established number of small contributions, such as $5, from supporters. A set number of these donations make them eligible for public campaign funds, if the candidate agrees to accept no additional private money and abide by strict spending limits. When candidates face privately funded opponents who outspend them or independent expenditures on behalf of their opposition, they qualify for additional funding, up to a limit.” This solution could put an end to all K-street cash and vague “PAC” donations by creating an equal amount of campaign funds.