Authors libby rittenberg 781

Chapter 15
Public Finance and Public Choice
Start Up: Where Your Tax Dollars Go
You pay sales taxes on most of the goods you purchase. If you smoke or
drink or drive a car, you pay taxes on cigarettes, alcohol, and gasoline. If
you work, you may pay income and payroll taxes.
What does the government do with the taxes it collects? If you go to a
public school, you are a consumer of public sector services. You also
consume the services of the public sector when you drive on a public street
or go to a public park. You consume public sector services since you are
protected by law enforcement agencies and by the armed forces. And the
production of everything else you consume is affected by regulations
imposed by local, state, or federal agencies.
The public sector is a crucially important segment of the economy, due in
part to its size. The nearly 90,000 government jurisdictions in the United
States, from local fire protection districts to the federal government, either
produce or purchase nearly one-fifth of all domestic goods and services.
The U.S. government is the largest single purchaser of goods and services
in the world.
This chapter examines the role of government in a market economy and
the ways in which the taxes that support government affect economic
behavior. The study of government expenditure and tax policy and of their
impact on the economy is called public finance.
Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org

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