Special Features Of The Financial System In The USA

The USA has a complex, extensive, multi-level system of managing the financial sector of the national economy that includes multiple financial organizations like Payday Depot, banks, etc.

Legislative, judicial, and executive branches, through the appropriate special structural links in their composition, carry out specific tasks and functions regarding the formation and implementation of state financial policy, as well as control over its legality, expediency, and rationality.

The main points

Considering the financial system of the USA, we should draw attention to the fact that it has the following features:

• the absence of a nationalized sector of the economy (however, enterprises of key industries that produce military, energy, metallurgical and other products are created and financed by the state or with its participation);
• a significant share of the property, primarily infrastructure facilities (water and energy supply enterprises, local transport, municipal hospitals, sports facilities, residential buildings, etc.), is at the disposal of locals;
• the federal government is not responsible for securities issued by the lower ranks.

The stability of budget and tax relations of the state and regions is one of the main characteristics of the US budget system.

The states have equal rights with the whole federation, so at the level of the federation and in the states, there are identical tax rates as an example.

The most fundamental limitation of the tax rights of the states is the ban on the introduction of certain indirect taxes that impede the freedom of trade between states.

There is practically no direct redistribution of funds between states. However, the US Congress has the right to finance expenses only for the general welfare of the country, which also prevents the redistribution of funds between regions.

States may impose any form of taxes, but may not hinder interregional economic ties, which leads to equal tax pressure.

Management features

Such a complex, multi-level financial system of the USA conditions the existence of an extensive management mechanism in the country. First of all, the key role plays the US Congress. It has two chambers in its structure:

• the Senate where each state is represented by two persons;
• the House of Representatives with the total amount of participants proportional to the population and therefore this amount is not limited by the law.

Each House and Congress has the right of a legislative initiative on any issues, except for financial bills. The latter must be proposed in the House of Representatives.

Such a situation is because large states can have a bigger influence on the treasury of the country than small ones. However, in practice, each chamber can vote against bills that were proposed by others.

The Senate may not pass a financial or any other bill. The representatives can give amendments to it that change its substance.

In this case, for the draft law to become law, the conciliation commission, which includes members of both chambers, must propose a compromise solution that satisfies both parties.

These are only general mechanics but they proved themselves to be efficient and useful for the prosperity of the whole country.

Considering the financial system of the USA, we should draw attention to the fact that it has the following features:

• the absence of a nationalized sector of the economy (however, enterprises of key industries that produce military, energy, metallurgical and other products are created and financed by the state or with its participation);
• a significant share of the property, primarily infrastructure facilities (water and energy supply enterprises, local transport, municipal hospitals, sports facilities, residential buildings, etc.), is at the disposal of locals;
• the federal government is not responsible for securities issued by the lower ranks.

The stability of budget and tax relations of the state and regions is one of the main characteristics of the US budget system.

The states have equal rights with the whole federation, so at the level of the federation and in the states, there are identical tax rates as an example.

The most fundamental limitation of the tax rights of the states is the ban on the introduction of certain indirect taxes that impede the freedom of trade between states.

There is practically no direct redistribution of funds between states. However, the US Congress has the right to finance expenses only for the general welfare of the country, which also prevents the redistribution of funds between regions.

States may impose any form of taxes, but may not hinder interregional economic ties, which leads to equal tax pressure.

Management features

Such a complex, multi-level financial system of the USA conditions the existence of an extensive management mechanism in the country. First of all, the key role plays the US Congress. It has two chambers in its structure:

• the Senate where each state is represented by two persons;
• the House of Representatives with the total amount of participants proportional to the population and therefore this amount is not limited by the law.

Each House and Congress has the right of a legislative initiative on any issues, except for financial bills. The latter must be proposed in the House of Representatives.

Such a situation is because large states can have a bigger influence on the treasury of the country than small ones. However, in practice, each chamber can vote against bills that were proposed by others.

The Senate may not pass a financial or any other bill. The representatives can give amendments to it that change its substance.

In this case, for the draft law to become law, the conciliation commission, which includes members of both chambers, must propose a compromise solution that satisfies both parties.

These are only general mechanics but they proved themselves to be efficient and useful for the prosperity of the whole country.

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