commission on fiscal imbalance 合集

Forty one states have a broad based personal income

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Unformatted text preview: d sales. The trend has been towards increasing the weight on sales, which lowers the production-oriented nature of the tax. The comparison is of the general sales tax, which provided the largest share of state revenue from 1970 until 1998 and the personal income tax. The combination of general and selective sales taxes continues to generate significantly more revenues than the personal income and corporate income taxes combined. Forty-one states have a broad-based personal income tax. Those states without a broad-based income tax have been more likely to experience significant fiscal pressure from a structural imbalance. 17 Commission on Fiscal Imbalance TABLE 4 DISTRIBUTION OF INDIVIDUAL INCOME TAX COLLECTIONS Federal Local — — — 92.6 83.5 81.1 97.5 96.5 95.3 93.8 91.4 86.2 84.3 85.5 82.4 80.5 80.8 81.1 81.7 82.3 82.5 1902 1913 1922 1927 1934 1940 1946 1952 1957 1962 1967 1972 1977 1982 1987 1992 1994 1995 1996 1997 1998 State — — 100.0 7.4 16.5 17.4 2.3 3.2 4.2 5.6 7.3 11.8 13.7 13.1 16.0 17.7 17.4 17.3 16.6 16.2 15.9 — — — — — 1.5 0.2 0.3 0.5 0.6 1.4 2.0 2.0 1.5 1.6 1.8 1.7 1.7 1.7 1.6 1.5 TABLE 5 DISTRIBUTION OF GROSS RECEIPTS AND CUSTOMS TAX COLLECTIONS Federal 1902 1913 1922 1927 1934 1940 1946 1952 1957 1962 1967 1972 1977 1982 1987 1992 1994 1995 1996 1997 1998 State Local 94.6 91.3 88.2 69.8 65.1 51.8 70.0 59.5 54.0 49.9 43.5 34.9 27.7 32.8 23.9 24.5 25.0 24.5 22.6 22.5 21.5 5.4 8.2 10.3 28.6 33.9 45.1 28.2 36.5 41.0 44.7 51.1 57.7 62.5 56.6 63.1 62.6 62.3 62.7 64.1 64.1 64.7 — 0.4 1.5 1.6 1.0 3.2 1.8 4.0 5.0 5.4 5.4 7.4 9.9 10.6 13.0 12.8 12.7 12.9 13.3 13.4 13.8 Despite the rapid growth in state income tax revenues, state governments continue to collect most of the general and selective sales taxes (see Table 5). States raise about one-third of their revenues with general sales taxes, which have lower elasticities than income taxes. The higher elasticity of income taxes would be true even if the sales tax had a broad base, but three factors have combined to make sales tax elasticities particularly small during the past several decades. First, though sales tax bases vary widely by state, the general pattern is for most services to be exempt. Rapid 18 Commission on Fiscal Imbalance growth in service consumption has resulted in a decline in the sales tax base relative to total consumption. Second, states have legislated new exemptions for some large items in an attempt to enhance equity (such as food and clothing) and other items to enhance economic development (such as manufacturing equipment). The exemptions shrink the tax base, regardless of whether they represent good tax policy. Third, the growing trend towards remote sales has reduced the ability to collect revenues that are due. All states impose a compensating use tax with their sales tax, which requires that the tax be paid if an item is either purchased or used in a state. The tax is due from the consumer if it is not collected from the vendor. States have tended to offset the poor revenue performance of sales taxes by raising rates. The...
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This note was uploaded on 03/06/2013 for the course ECON 220 taught by Professor Paulo during the Spring '13 term at University of Liverpool.

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