Public Finance Discussion 

Public Finance Discussion

The federal government has various revenue sources that ensure its functionality. These sources include taxes, grants, and loans. These revenue sources present have several advantages and disadvantages. Taxes, for instance, ensure equality as the sacrifice of paying cannot be shifted and are certain as the taxpayer knows how much they pay. Some of the disadvantages include inconvenience, as the taxes are always a pinch to the payer. Besides, taxes, are evadable as an individual, particularly big businesses, can submit doctored returns. Again, grants have numerous advantages. For instance, one does not have to pay back a government grant. Besides, there is no limit to the number of grants one can take. The disadvantages are that grant application requires immense crafting which can be challenging. Besides, grants usually come with strings attached, which imply that one cannot use the money beyond designated purpose.

In case the federal government has financial challenges, lower governments and non-profit organizations will feel adverse financial impact. As grants are awarded by the federal government, financial challenges will mean no or low grants to other governments and non-profit organizations. Furthermore, grants are usually used to build national infrastructures, such as bridges, roads, and schools. In this regard, therefore, financial constraints will lead to halting of these projects. Lack of grants and contributions will force governments and organizations to enforce measures to reduce expenditure, such as downsizing workforce. Mainly, this will directly impact taxes and business activities of the state, local governments, and non-profit organizations.

The federal government should ensure equity and fairness in financing. Equitable and fair financing ensures that all citizens are accorded equal opportunities in contesting for government funds and jobs in lower governments and non-profit organizations. Equity and fairness act as a catalyst to the development of effective policies that ensure funds are used effectively and efficiently for their intended use.