Scot Wick Blog

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 4 The Economics of the Public Sector

Chapter 12 of 36 The Design of the Tax System

Section 11 of 22

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Education is the largest single expenditure for state and local governments.

Local governments mostly pay for public schools, kindergarten through high school.

State governments fund their public universities.

Public welfare includes

· transfer payments to the poor

· federal programs administered by state and local governments

Highways includes building and maintenance of roads and bridges.

Other includes

· government employees including police

· fire protection

· libraries

· garbage removal and snow removal

· park maintenance

Calculating from the figures in Table 6 and previous tables 2, 4, 5, in billions of dollars

· Federal tax revenue $2568, spending $2730, deficit as percent of spending = -5.9%

· State/local tax revenue $2021, spending $2014, surplus as percent of spending = +0.4%