US Tax Policies and Economic GrowthFiscal policy refers to the use of taxation and spending to impact the economy of any country. More specifically, a country's economy relies on the main fiscal policy instruments that involve public spending in different sectors of the economy and changes in the tax system. Due to changes that the government may make on both components, for example through the Ministries of Finance or Planning, various macroeconomic variables may be affected. These include income distribution, aggregate demand and resource allocation. In addition to residence and non-residence taxation, public expenditure can be financed through various other mechanisms. These include the sale of fixed properties such as land, local or global loans and seigniorage, among others. The three main directions of fiscal policy indicated by Hansen 36 include restrictive, neutral and expansionary fiscal policies. Given the wide range of activities that the U.S. government spends funds on, including security, health care, education, and transportation, it must ensure that it has effective ways to raise revenue. This article will discuss US fiscal policy and economic growth. In its efforts to increase annual revenues and efficiently provide public goods to its citizens, the U.S. government has implemented effective tax policies. Implemented at the state and federal levels, the United States government has implemented various taxes through which residents and non-residents are able to contribute to the country's economic growth. Examples of taxes include capital gains, sales, and income tax. Even though the government's primary source of funding is taxes, federal taxes... middle of paper ... have been able to effectively raise high revenues from large numbers of workers. Through regulations such as the Tax Reform Act of 1986, the U.S. government aims to combat tax evasion, which is a major challenge facing many countries. The U.S. economy faces challenges such as high wealth inequality and high defense spending. This has made the budget in deficit for a few years now. The high revenue that the US government receives every year has prompted the country to launch various industries and research centers which have resulted in an improvement in the economy. Additionally, the increase in the number of wealthy individuals has led to the creation of many small businesses that are a major source of employment. This has led to an increase in household incomes, creating strong demand for domestically produced goods and services as well as those imported..