Hypothecation

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Template:Confusing Hypothecation is a pledge of property as security for a debt without transfer of possession. The ownership remains with the individual who owns the property and is not transferred to the debt issuer.

Definition 2: (literally: "hypothetical dedication") a treatment and possible justification for government taxation or expenditure. For instance in the United States the Gasoline Tax is dedicated to the funding of transportation infrastructure. This definition also corresponds to fees imposed on the sales of bonds to underwrite approved infrastructure subsidy programs. A kind of per-transaction tax on securities, for example, could be .3 cents per every dollar traded going to underwrite programs such as building of a sewage or water treatment plant for third world countries. In this case the pledge is the fee imposed on the bonds trading. This is used to finance debts for infrastructure improvements.

In reality the system is not so closed. If the transportation infrastructure's or a program's costs were to exceed hypothecated tax revenue, the services would not be cut. Likewise, if revenues were to exceed costs the balance would not go unspent, but be diverted to other uses.Template:Econ-stub