Econ 232 public finance

Written assignment 9a

Equity

due Nov. 21

20 pts.

Premises:

If total government spending in the USA were $6 trillion,

With GDP = $18 trillion.

Spending is divided among:

$1 trillion interest on the debt

$1 trillion in transfer payments for social security

$1 trillion in transfer payments for medical care.

$3 trillion for collective goods, including the military.

Assume we are starting with today’s distribution of wealth and income.

Design a tax system that maximizes equity or justice,

Regardless of any political consideration,

And regardless of efficiency.

Also state your criterion for equity in public finance.

Describe how the tax system would be split among the federal, state, and local governents, and also in the native Indian nations.

And provide an explanation.