Embedded Files
Public Finance
Syllabus
Spring 2021
Dr. Kevin Klein Office: 238 Kirby
Office Hours: 10 - 12 am M, 10-1 W, and F and also by appointment.
Virtual office hours 24-hours a day at kklein@ic.edu Phone: Office: 245-3474, web address: http://www2.ic.edu/klein
Optional Text: Public Finance, 11th edition, by David N. Hyman. Published by Southwestern publishing
COURSE OBJECTIVES
Generally speaking, there are three major economic objectives of government: (1) achieve an efficient allocation of resources (2) achieve an "equitable" distribution of income and (3) achieve the stabilization goals of full employment, price stability, "adequate" economic growth and balance of payments equilibrium. Government stabilization of the economy is a macroeconomic objective and requires the tools of macroeconomics (developed in Economics 105) to study why this is a goal and how it can be achieved. The first two objectives of government are the subjects of investigation in this course. The objectives are microeconomic objectives requiring microeconomic tools (also developed in Economics 105) to study why and how government attempts to achieve these objectives.
In this course we begin our study of government involvement in the marketplace by investigating the concept of economic efficiency. There are many cases where, in fact, government has very little to contribute toward an improvement in market efficiency. In these cases, government involvement in the market harms rather than helps society. In other markets, governments can be very effective in improving the welfare of society though an improvement in resource allocation. Once we have investigated what conditions must be present for governments to justify becoming involved in a market, we begin to look at how governments can best interact in the markets. We will look at the economic basis for why governments spend money and how the economy is affected by the taxes levied by governments to pay for their expenditures. The basic questions we will be investigating are: how is the allocation of resources and the distribution of income affected by the spending and taxing activities of government? What is the economic rationale for governmental activities such as spending on defense, highways, welfare and so on? What is the economic rationale for taxes levied? We will then investigate some methods of analyzing government spending programs that help determine whether a program is efficient from an economic perspective. Investigating these questions requires positive and normative economic analysis using tools of microeconomics.
CURRENT EVENTS
Public Finance is concerned with the size of government, the kinds and levels of expenditures that governments make, the type and levels of taxes levied, things that make headlines in newspapers and major stories in news magazines. Understanding and analyzing current events is an excellent way to learn economics and may be the best indicator of your retention of the course material. Reading current events can also provide you with additional motivation for studying and is helpful in discovering how relevant the course is to real world events. Excellent current event sources include The Wall Street Journal, The New York Times,Time, and News Week. At least one of these should be read on a fairly regular basis. At least one of these should be read each day, either on-line or in print.
BLUEPRINT COMPLIANCE
The class is approved for the BluePrint categories of Information Literacy and Ethics and Social Responsibility.
GRADES AND WRITTEN COURSE WORK
Your grade this semester will be based on this grading method.
Four exams 400 points
Professional Disposition 2 points 60 + points.
each day
_______________________________________
Up to 460 + points
There will be four exams. Each exam will consist of an in-class and out-of-class portion. The purpose of the writing assignments is to allow you to explain, in writing, certain concepts discussed in class. Since these are both in and out-of-class experiences, you essentially have the world of information available to you. Your work will thus be graded not only for the correct answer, but also the quality of the correct answer and the degree to which the answer is yours and yours alone. When conducting research for exams, you are encouraged to consult with each other as well as internet and library resources. However, when constructing your answers for submissions, take great care that the final answers are in your own words. Answers that are significantly similar to other sources, including other members of the class even when your source is referenced, will be docked significantly. A good rule of thumb is that no more than 10% of an answer should be a result of direct quotes or paraphrasing. Any material copied from external sources but not sourced will be considered plagiarized material and will be scored as a zero for the entire exam even if other material is not plagiarized. All referenced material should be referenced in text with a detailed source list at the end of the exam.
Your course grade will be determined using this grading scale:
A -- 91+%
A- -- 90%
B+ -- 89%
B -- 81%
B- -- 80%
C+ -- 79%
C -- 71%
C- -- 70%
D+ -- 69%
D -- 61%
D- -- 60%
F -- lower than 60%
The policies of the Illinois College Student Honor Code will be enforced in this course. It is the student’s responsibility to understand the details of this honor code and the consequences of violating the code. Click here for more information on the Illinois College Student Honor Code.
Professional Dispositions
Professional behavior is expected of all in the classroom. Professional conduct means the kind of behavior that would be expected from a professional employee attending a workplace meeting. This includes preparing beforehand, arriving on time with all materials and actively participating during the session. Some examples of unprofessional conduct in class include working on other classes’ work, sleeping, arriving late, leaving the room during class, texting or checking messages, or engaging in side conversations. You are expected to be courteous and thoughtful of classmates, visitors, and faculty. Success in life is, in part, a result of approaching situations professionally. The Economics, Accounting, and Finance department wants to help begin you on your professional path by establishing professional expectations. Most of these policies can be summarized in a short phrase. Treat others with respect. Students demonstrating a failure to follow the good professional practices listed here will, without notice, have attendance points for that day removed.
Policy for Missed Exams
The specific due dates of exams and papers are listed on the on-line calendar. Out-of-class Exams turned in after the due date and time will be penalized 10% per 24 hour period after the deadline.
Attendance and Class Participation
Two (2) attendance points are given for each day attendance is taken in class. See professional disposition above. More importantly there is generally a direct relationship between attendance and final course grades. With this in mind, regular attendance is recommended. Since exam questions will be taken from class lectures as well as text and homework assignments, students missing lectures should arrange for another student colleague to take notes for them.
Cell Phone and Computer Usage
See professional disposition above.
Students with Disabilities
It is the policy and practice of Illinois College to make reasonable accommodations for students with properly documented disabilities. If you are eligible and would like to request them for this course, please let me know ASAP. If you have questions or think you may have a disability, please contact the Disability Services Coordinator (217) 245-3774 located on the 2nd floor of the Caine Student Center.
Course Outline
I. The Economic Basis for Government Activity
Chapter 1 – Individuals and Government
Chapters 2 – Efficiency, Markets, and Governments
Examination 1
Chapter 3 – Externalities and Government Policy
Chapter 4 – Public Goods
Chapter 5 – Public Choice and the Political Process
Examination 2
Financing Government Expenditures and Taxation
Chapter 10 – Introduction to Government Finance
Chapter 11 – Taxation, Prices, Efficiency, and the Distribution of Income
Chapter 12 – Budget Balance and Government Debt
Chapter 13 – The Theory of Income Taxation
Examination 3
Chapter 14 – Taxation of Personal Income in the United States
Chapter 15 – Taxation of Corporate Income
Chapters 16 – Taxes on Consumption and Sales
Chapter 17 – Taxes on Wealth, Property, and Estates
If time allows, selections from Chapters 6, 7, 8, 9, and 18
Exam 4
NOTE: This is a tentative schedule and the course content may be changed with notice. See on line calendar for a more detailed listing of content coverage.
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