Tyrone Schiff Political Science 300Societies are complex and fascinating entities in which to search for understanding. The different ways in which they manage, behave, and organize reveals agreat deal about their core values, beliefs, and hopes. In order to evaluate societies,Joseph Schumpeter made the claim that “public finances are one of the best starting points for an investigation of society, especially…of its political life.” Schumpeter’sstatement is valid in a political system like the United States, because, ideally, votingconstituents elect officials to make decisions about public finances in their citizenry’s best interests. These governmental decisions that ought to echo the interests of its societyinclude various key features of fiscal policy, such as taxes, outlays, tax expenditures, andthe national debt. These examples provide some perspective on issues that are most pressing to a given society. However, the elected officials in power who enact these policies historically have had vastly different philosophies regarding their fiscal plans.This ongoing political divide between United States’ political parties illustratesSchumpeter’s claim that politicians and individuals in society are intrinsically linked toone another through public finances.The differing stance on taxes reveals the political divide in how to approach public finances. Current Presidential candidates, John McCain and Barack Obama,conservative and liberal, respectively, have vastly different ideas on tax policy.

“TheObama plan would reduce taxes for low- and moderate-income families, but raise themsignificantly for high-bracket taxpayers…

But, in sharp contrast to Obama, [McCain]would cut taxes for those in the top 1% by more than $125,000, raising their after-taxincome an average 9.5 percent.”

Quite clearly, public finances would be used

Williams, Roberton, and Howard Gleckman. 2008. "An updated analysis of the 2008 presidentialcandidates’ tax plans: Executive summary."Washington, DC: Tax Policy Center.

Ibid.

Tyrone Schiff Political Science 300significantly differently based solely on political ideology. This brings to mind just howimportant the role of voting in an election and choosing a public official is.Under current President, George W. Bush, the general tax trend of the last 30years

has continued; providing a larger after-tax benefit to the richest 1% of the UnitedStates.

This has led to “a large increase in income inequality.”

If public finances explorethe on goings of political life, then one can reasonably infer that the general sentiment of the United States political movement has been to aggressively exploit the lower incometax brackets, while benefiting the higher brackets. This describes an illogical series of events. Even though the richest 1% of America represents a significantly smaller portionof the overall voting constituency, they have received a disproportionately greater benefit.America’s tax system reveals a biased political life favoring the rich and undermining the poor.Outlays describe how the government plans on budgeting and using the revenuethey take in from taxes. One particular outlay, the war in Iraq, is highly controversial andhas received criticism from

New York Times

columnist, David Leonhardt.

Since it began,it has cost an estimated $1,200 billion, which Leonhardt argues could have been used onan, “unprecedented public health campaign… universal preschool… reconstructionfunds… national security…and a peacekeeping force.”

As a college student, I’m particularly annoyed by this outlay in relation to Student Loans, which will receive just$1 billion in 2009, and a combined amount of $30 billion between 2009 and 2018.

While

Krugman, Paul. 2003."The tax-cut con," New York Times Magazine (Sept. 14).

Furman, Jason, 2007."The effect of the 2001-06 tax cuts on after-tax incomes," testimony before the U.S. House Committee on Ways and Means, Sept. 6. Washington, DC: Brookings Institution.

Ibid.

Leonhardt, David. 2007."What $1.2 trillion can buy," New York Times (Jan. 17).

Ibid.

Congressional Budget Office. 2008.The Budget and Economic Outlook: An Update (Sept. 9). "The Budget Outlook."

Tyrone Schiff Political Science 300this is a budgetary allotment, the decision to devote 200 times more resources

to amilitaristic endeavor over academic pursuit speaks volumes about American political priorities.Federal entitlement programs like Social Security, Medicare, and Medicaidreceived $1,260 billion in 2008, practically half of total tax revenue.

These enormousentitlement programs are geared towards an older demographic. Perhaps the reason thatthe younger demographic does not get similar entitlements is simply due to the low voter turnout they have in comparison to the older demographic.

This means that the older demographics issue’s are at the forefront of governmental thought. This example showsan undeniable link between society, political life, and public finances.Tax expenditures are special tax provisions that are essentially spending programs.

In a given year, there is approximately $800 billion in tax expenditures.

Maya MacGuineas, a

Washington Post

reporter, is adamantly opposed to the notion of taxexpenditures, “They regularly pay people and businesses to do what they would doanyway, making them both poorly targeted and unnecessarily expensive.”

These taxexpenditures seem ineffective and unnecessary, yet similar to our discussion regardingtaxes, much of the policy has been implemented to benefit the rich.

For example, the biggest tax breaks in the United States, on home mortgages andhealthcare vouchers, favor the upper income brackets.

People who pay mortgages onhousing receive tax breaks, but they are disproportionately uneven. While these

Ibid. at 6

Ibid. at 8

Lecture 9/22/2008

MacGuineas, Maya. 2007."The $800 billion tax loophole," Washington Post (Jan. 18).