WK 4_Assessment

docx

School

University of Phoenix *

*We aren’t endorsed by this school

Course

664

Subject

Economics

Date

Jun 26, 2024

Type

docx

Pages

Uploaded by Ebahlove

WK 4 - Apply Summative Assessment: Government Intervention Analysis. University of Phoenix Ismanuela Morange ECO/535: The Digital Economy Maria Hamideh Ramjerdi 06/11/2024

Government Intervention Programs Analysis- Governments address inefficiency through intervening in markets (Zhao, 2017). In an optimally effective market, wealth is appropriately allocated. However, resources are scarce in inefficient markets. Governments try to combat such market inequalities. This paper will analyze government intervention programs, the market failure leading up to the interventions, and give Recommendations whether the program should be continued or not. Governments address inefficiency through intervening in markets (Zhao, 2017). In an optimally effective market, wealth is appropriately allocated. However, resources are scarce in inefficient markets. Governments try to combat such market inequalities. This paper will analyze government intervention programs, the market failure leading up to the interventions, and give Recommendations whether the program should be continued or not. Governments address inefficiency through intervening in markets (Zhao, 2017). In an optimally effective market, wealth is appropriately allocated. However, resources are scarce in inefficient markets. Governments try to combat such market inequalities. This paper will analyze government intervention programs, the market failure leading up to the interventions, and give Recommendations whether the program should be continued or not. Governments tries to address inefficiencies through intervening in the market sector. In an optimally effective market, wealth is appropriately allocated. However, resources are scarce in inefficient markets. Governments try to combat such market inequalities. This paper will analyze government intervention programs such as the earned income tax credit (EITC) and the child tax credit, the market failure leading up to the interventions, and also give recommendations on whether the programs should be continued or not. The earned income tax credit (EITC) and the child tax credit serves as crucial government initiatives which are aimed at tackling the economic disparity, whilst providing assistance to families with low to moderate incomes within the U.S. Although, these programs face many obstacles, such as, elevated mistakes and fraud rates; yet, it has successfully diminished poverty by a great margin, augmented workers engagement and improved family’s welfare. These programs main objectives aim to rectify market flaws by promoting a more equitable allocation of resources and opportunities. Although, the EITC and the child tax credit have

demonstrated effectiveness, enhancements will always be required as it is crucial to take necessary measures to streamline administration, minimize fraud, and tackle potential job dis- incentives. Additional study is also required in order to enhance their efficacy in attaining socio- economic goals. According to Pettinger, the role of government involvement in modern economies is sometimes subjected to controversy; the earned income tax credit (EITC) and the child tax credit are two of the most important government measures within the U.S. that attempts to tackle the income inequality and provide assistance to families with low to moderate incomes. These programs were implemented to address market flaws that lead to an inequitable allocation of resources and opportunities. (2020). The effectiveness of government intervention compared to market-based solutions is a basic argument in the field of economics. Proponents of free markets contend that government interference can result in the misallocation of resources and inefficiencies. Nevertheless, advocates of government involvement emphasize instances of market failure where intervention becomes imperative. Market failures, such as externalities, inadequate supply of public goods, and the presence of monopolistic power, can disrupt the allocation of resources, which can result in social inequalities. Government involvement is warranted in the case of the EITC and the child tax credit to equitably redistribute income, rectify market failings, and alleviate poverty. These programs aim to offer economic assistance to people and families with low incomes; thereby fostering a social and well-being community, all while diminishing income disparity. The earned income tax credit (EITC) and the child tax credit have provided substantial assistance to a significant number of individuals and families with low to moderate incomes throughout the United States. The earned income tax credit (EITC) has been effective in

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

incentivizing labor force engagement amongst single moms with lower levels of education and has also played a role in diminishing poverty rates as a whole. The earned income tax credit (EITC) enhances the post-tax earnings of low-income households by granting tax credits to qualifying workers. Consequently, this measure efficiently elevates some families out of poverty. Nevertheless, the EITC has obstacles such as a substantial incidence of errors and fraudulent activities, which might diminish its efficacy. Moreover, several opponents contend that the EITC generates disincentives for individuals to augment their wages, as any increased income might lead to diminished benefits (Braga et al. ,2020); & (Courtin et al., 2020). Likewise, the child tax credit has played a crucial role in offering economic support to families with children. The child tax credit alleviates financial hardship and supports child-rearing expenditures by decreasing the tax burden on families. Nonetheless, there have been concerns expressed about the possible influence of the child tax credit on employment participation. According to several economists, implementing an increased child tax credit without income restrictions may result in a considerable amount of people opting to exit the labor force, thereby diminishing the total supply of labor. (Braga et al. ,2020). Externalities and unexpected consequences can arise from government interventions such as the earned income tax credit (EITC) and the child tax credit. These initiatives can have both planned and unplanned effects. The earned income tax credit (EITC), for example, might potentially result in better future income for claimants by encouraging their engagement in the working and enhancing their experience in the labor market. Nevertheless, the progressive earnings structure of the EITC may put certain persons with limited income due to health conditions or other circumstances at a disadvantage. Moreover, the intricate nature of the EITC

result in a significant occurrence of mistakes and fraudulent activities, therefore, diminishing its efficacy and causing inefficiencies within the tax system. The child tax credit has also been linked to favorable results, such as enhanced nutrition, less dependence on precarious financial services and heightened investments. Nevertheless, there are still apprehensions that an enlarged child tax credit may potentially diminish labor market engagement, specifically among individuals with low income. In addition, the child tax credit may unintentionally exacerbate economic inequality by offering more substantial advantages to families with higher incomes. (Braga et al. ,2020). The financial expenditure associated with government intervention programs, such as the earned income tax credit (EITC) and the child tax credit, is that the most crucial factor to consider when evaluating them is their long-term viability and the influences/impact they have on the economy. According to Courtin, et al, on December 2023, an estimated 23 million eligible workers and families earned nearly $57 billion in benefits from the earned income tax credit (EITC). Although the precise percentage of GDP that the EITC represented is not easily accessible, research indicates that removing the EITC might have substantial and lasting effects on the economic expansion. Likewise, the expense associated with the child tax credit is significant, but the precise amounts differs. (2020). Economists have provided varying evaluations of the usefulness and effects of the EITC and the child tax credit. The earned income tax credit (EITC) has received acclaim for its favorable immediate impact on labor force engagement & alleviation of poverty. Nevertheless, some contend that the intricate framework of the EITC exacerbates administrative difficulties and instances of fraudulent activity. Similarly, the child tax credit has been praised for its

contribution to assisting families with children and alleviating financial burden. However, there are still worries over the possible effects of this on workforce participation and economic inequality (Butkus, 2023). Considering the substantial advantages of the EITC and the child tax credit in alleviating poverty and assisting families with low to moderate incomes, it is advisable to maintain these programs with appropriate adjustments, it is also imperative to make concerted efforts to optimize the management of the EITC and minimize instances of fraud and mistakes. In addition, authorities should explore strategies to alleviate possible deterrents to employment linked to the child tax credit, while also ensuring that the program remains available to those who require assistance. Additional investigation and examination would be necessary to enhance the efficacy and productivity of these treatments for attaining their intended goals. Therefore, to summarize, the EITC and the child tax credit are essential instruments in the fight against poverty & the advancement of economic parity. By making necessary adaptations, they can persist in making significant contributions to the welfare of millions of Americans.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

References- Braga, B., Blavin, F., & Gangopadhyaya, A. (2020). The long-term effects of childhood exposure to the earned income tax credit on health outcomes. Journal of Public Economics, 190, 104249. https://doi.org/10.1016/j.jpubeco.2020.104249 . Courtin, E., Aloisi, K., Miller, C., Allen, H. L., Katz, L. F., & Muennig, P. (2020). The health effects of expanding the Earned Income Tax Credit: Results from New York City. Health Affairs (Millwood), 39(7), 1149-1156. Retrieved from https://doi.org/10.1377/hlthaff.2019.01556 Pettinger, T. (2020). Should the government intervene in the economy? Economics Help. Retrieved from https://www.economicshelp.org/blog/5735/economics/should-the-government- intervene-in-the-economy/

Butkus, N. (2023). Refundable Credits a Winning Policy Choice Again in 2023. Institute on Taxation and Economic Policy. Retrieved from https://itep.org/refundable-credits-winning- policy-choice-2023-child-tax-credit-eitc/

WK 4_Assessment

Related Documents