The distribution role of public finance

The government, through public finance, is able to perform the function of distributing income between various sections of the society. When market forces are left to function independent of the government, the resources of the country will end up with the most resource-endowed members of society. Auld (1975) notes that redistribution of income and resources is impossible without government intervention even in situations of perfect competition. The redistribution function of the government is performed in various ways but most specifically through taxation.

The government will decide if certain sections of the society will need assistance and on whether the rich should shoulder some of the burdens of the poorer members of society. Through levying appropriate taxes on the rich, the government could provide services to the poor (McLeod, 2002). In addition, the government is able to use its public finance policies to reign in companies that could be developing monopolistic tendencies. In the US, government redistribution of resources is seen in the use of affirmative action to uplift the lives of minorities.

While there is much that has been achieved through affirmative action, the government could improve on this by encouraging more direct participation by the endowed members of the society. There have been opposition to affirmative action on many grounds including legal ones (Kivel, 1997). Corporations that are at the forefront in their respective industries could play a crucial role in taking affirmative action to another level. Rather than depend on tax revenue alone, the government should encourage such companies to incorporate minorities in their organizations in productive roles.

The companies could do this by hiring staff from minority groups and providing them with the skills they need to be productive in the society. In addition, large corporations should be encouraged to be the facilitators of communally beneficial developments in poor neighborhoods. In this way, such companies play a more direct role in community development and actually own the process of affirmative action. In return, the government should offer incentives such as lower corporate taxes for the companies that can prove that they actually work with the communities.