By Genebeck HAHN, Taekyoung KWON, Jooseok SONG
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20 Ruggeri Direct transfers to individuals are the easiest category of expenditures to allocate. They involve a direct relationship between cost to government and benefit to individuals because a dollar spent by the government adds a dollar of income to the individual. In addition, the beneficiaries of these transfers are easily identifiable because these programs are usually targeted to select groups. For example, transfers to seniors are allocated to individuals 65 years of age and older. Similarly, transfers to children are allocated to the family units to which they belong.
First, it involves a balanced-budget exercise in which both the level of expenditures and the revenues used to finance them are kept constant. Therefore, it bypasses the thorny issues associated with comparisons of income with and without government spending. Second, it minimizes the potential indirect effects because it confines them to the changes in the distribution of a given level of government expenditures. These indirect effects would arise only when these distributional changes affect the behavior of economic agents.
Income from government spending 1. Government transfers to persons including public pensions and transfers to charitable and nonprofit organizations 2. Government transfers to businesses 3. Government wages and salaries 4. Government purchases of goods and services (excluding wages) 5. Interest on the public debt E. Direct taxes on individuals F. Total taxes II. Income concepts 1. Private income Private money income (A) plus nonmoney additions to private income (B) and adjustments to private income (C).