Fiscal Policy
tax and expenditure limits
Rules that limit how much a state legislature may increase revenues or spending in an annual budget.
budget gimmick
Solves a fiscal problem for a short term
For every $4 collected in taxes, $1 is collected in user fees
What proportion of state and local tax is raised by user fees
During fiscal hardship When elections are far away If a neighboring state has the tax (lotteries)
When do taxes tend to increase?
tax equity
Which income groups bear the burden of a tax.
local government
Who collects property taxes?
they receive one large bill vs. individual purchases for sales tax (collected on a single bill or two bills every six months)
Why are people more attentive to property taxes than sales taxes?
User fee
a direct charge for use of a service, charged to the user of the service. (ex: tuition, hospital charges, highways)
estate taxes
are levied on the estate of a deceased person before it is distributed.
severence taxes
levied on resources "severed" from the earth or sea and are applied to resource extraction industries such as fishing, mining, and coal, oil, and natural gas production.
general funds
money can be used for any purpose; politicians fight over the use of these funds; ex: income tax revenue
categorical grants
money from the fed. govt. for specific purposes
block grants
money from the fed. govt. that give state and local govt. BROAD leeway in designing and implementing programs
non-general funds
money is set aside for specific purposes; ex: gas tax revenue
progressive tax
the wealthier people pay a larger portion of their total income to cover the tax than the less affluent pay of theirs
Demand-driven
A greater level of taxation is driven by demand for more governmental services
supermajority vote requirements
A rule that requires more than a simple majority vote to approve a budget, for example, 60% or a two-thirds majority.
About the same amount - $1.6 trillion
About how much do states collect compared to the federal government (excluding social security)?
34%
About what percent of state revenue is generated by income taxes
pension funds
Covers public employees' retirement payments
Although most locally generated revenues come from local taxes (40%), local governments rely more on charges and fees than states (17% to state's 11%)
Describe the sources of revenue for local governments.
progressive
Do income taxes lead to progressive or regressive tax codes?
more
Do states that receive more money from the federal government spend more or less of their own money than states which receive less?
Property taxes = a flat rate (thus cost the poor and the middle class a larger share of their wealth than they cost the wealthiest people)
Explain why property taxes have become more regressive.
elasticity
How stable (or volatile) revenues from the tax are in times of economic boom and bust.
income tax
What is the largest source of tax revenue for most states?
exportable tax
Paid for by people outside of the state (such as hotel taxes and taxes on natural resources such as oil)
Leviathan
Politicians tax and spend without regard for how much citizens are willing to pay
Social services: health care
What are the largest expenditures for state governments?
48
gambling is a source of income in how many states?
regressive tax
the poor people pay a larger proportion of their income than the wealthy do.