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Winter 2022

ISSN 0890-913X

Volume 37, Number 4

The Distribution of Transfers and Taxes: Incentives and Implications for the US Deficit and Debt

Jody W. Lipford, Francis Marion University - United States of America

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TheJournalofPrivateEnterprise37(4),2022,1-20TheDistributionofTransfersandTaxes:IncentivesandImplicationsfortheUSDeficitandDebtJodyW.Lipford*FrancisMarionUniversityUnitedStatesofAmericaAbstractTheUnitedStates,likemanyWesterndemocracies,faceshighandrisingpublicdebtthatmaybeunsustainableinthelongrun.ThisUSfiscalconditionistheinevitableoutcomeofapoliticalsystemthatredistributestransferpaymentsbroadlyacrosscitizen-votersandthatrestrictstaxationnarrowlyacrosscitizen-voters.USdatasince1979showexactlythispattern.Thesetrends,oftensupportedbyvote-seekingpoliticians,pressuresfromcitizen-voters,andpoliticalnarratives,arecommensuratewiththecountry’srisingratioofgovernmentdebttogrossdomesticproduct.JELCodes:H22,H53,H63Keywords:transferpayments;taxes;governmentdebtI.IntroductionChronicbudgetdeficitsandmountingpublicdebthavebeenthenormforUSfiscalpolicyfordecades.Althoughmacroeconomicconditionsmatter,thelong-termupwardtrendoffiscaldebt,withtheexceptionoftheprosperousmid-tolate1990s,indicatesthatshort-termeconomiccrises,whetherbornofavirus,asintheCOVID-19pandemic,orofafinancialmeltdown,asintheGreatRecession,areinadequatetoexplainfullythecountry’sfiscalwoes(MerrifieldandPoulson,2020).Manyfactors,social,economic,andpolitical,areatplayinapublicbudgetaryprocessthathasmadedeficitsthenorm,butthepersistenceoffiscaldeficitsandever-risingdebtsuggeststhatsomeforcesbornofincentivesinherenttothebudgetaryprocessarebehindthislong-termtrend.Twopoliciesthatyieldincentivestoincreasespendingandlowertaxessothatexpendituresoutstriprevenuesroutinelyareawiderdistributionoftransferpaymentsandacorrespondinglynarrower*IthankDavidJ.Hebert,theeditorofthisjournal,andananonymousreviewerforhelpfulcommentsonearlierdraftsofthispaper.

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Metadata [hide]

Title	The Distribution of Transfers and Taxes: Incentives and Implications for the US Deficit and Debt
Authors/Creators:	Jody W. Lipford, Francis Marion University - United States of America
Year:	2022
Volume:	37
Number:	4
Pages:	1 - 20
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	transfer payments; taxes; government debt

Citation:
Lipford, Jody W. / 2022. "The Distribution of Transfers and Taxes: Incentives and Implications for the US Deficit and Debt." The Journal of Private Enterprise, 37(4): 1-20.