Term paper Essay Example | Topics and Well Written Essays - 1250 words - 3

Term paper - Essay Example Apparently, taxation policies as well as government spending have considerable effect on the economy and future prospects of the government as far as international relations are concerned. Taxation policy must take into account the fundamental rights of all workers in an economy (Mishkin 34). The government should particularly take into account the total population of its workforce during a given financial year even as it plans bring the fore the budgetary estimates. Since the budget of most countries is largely dependent on the local taxes as the main source of funding, the wage rate per worker will be a key factor. Taxation policy should not compromise the worker’s ability to meet their day-to-day needs to keep life moving (Mishkin 34). Hence, fiscal policy makers must take into account the wage rate, currency strength locally and internationally, and the cost of living. The government must therefore consider the current situation of its labor market before making any critic al additions regarding purchasing goods and services, distributing transfer payments, and collecting taxes. If the current trend were unfavorable to the economy and labor market, the government would then have to revisit its fiscal policy to save the situation (Mishkin 34). An increase in amount of taxes that employees pay to the government will adversely affect their disposable income. In most cases, the taxation policy that triggers increases in taxes paid to the government tends to lower the purchasing power of most households. Thus, a considerable number of people working in manufacturing and service industries among other forms of industries will have to relinquish certain commodities that were previously a necessity to them (Agell 25). The main area of concern for fiscal policy is looking into ways in which changes in the government budget affect the overall economy. The changes may not only compromise the capacity of the government to meet its policy needs but also providing essential services to the people. Heads of country’s finance or treasury department are on the verge of drafting fiscal policy that is realistic and achievable considering the strength and sustainability of the current economic state of the country (Agell 25). The flagship annual document of finance ministry essentially reviews the growth and developments of the economy. Of critical value is the capacity of the economy to withstand the constantly changing economic, social and political prospects. Fiscal policy further affects the quality of labor in the market. If the government spending surpasses its total revenues, one of the major options it employs to save the situation is raising the taxation rates. The increase shall take a toll on struggling employees, who in most cases hardly meet all their necessities. Hence, policy prospects should be workable and sustainable in the short term and long term despite the impending challenges to the economy during implementation of its programs. Under such circumstances, employees and business organizations will essentially react by initiating strategies of ensuring the government policy does not compromise their day-to-day lifestyle (Agell 25). In the wake of growing concerns about bad fiscal policy, most employees as well as prospective workers have resorted to look for employment opportunities in