Political Science - Chapter 4

National Federation of Independent Business v. Sebelius (2012)

The court ruled that the major provisions of obamacare were constitutional but that the federal government could not force state governments to join in the planned expansion of medicaid

A budget in which current expenditures are equal to or less than income

balanced budget

Money spent by government. (salaries are the single largest source of expenditures)

expenditure

6 types of taxes that constitute the major funding sources of state and local governments, accounting for roughly 1/2 of all revenues:

sales property income motor vehicle estate gift

Taxes on natural resources that are removed from the state are called _________________ taxes.

severance

Effective in Effective Tax Rate

simply acknowledges that some places have exemptions and adjustments that make the effective tax rate lower than the nominal tax rate.

Sales tax makes up for about ______ % of total state and local government tax revenues.

15

Roughly ______ % of money coming out of state treasuries goes to K-12 education.

20

Proposition 13 (1978)

A successful California state ballot initiative that capped the state's real estate tax at 1 percent of assessed value. The proposition radically reduced average property tax levels, decreasing revenue for the state government and signaling the political power of the "tax revolt," increasingly aligned with conservative politics.

Certificates that are evidence of debts on which the issuer promises to pay the holders a specified amount of interest for a specified length of time and to repay the loans on their maturity.

Bonds

Cash shortages that result when the amount of money coming into the government falls below the amount being spent.

Budget deficits or shortfalls

The procedure by which state and local governments assess revenues and set budgets

Budget process

Investments in infrastructure, such as roads, new schools and new airports. States: highway construction, power plant construction, pollution control and even land conservation.

Capital investments

South Dakota v. Wayfair (2018)

Courts overturned the Quill decision and allows states to collect sales taxes from online retailers whether they have a physical presence in the state or not.

Spending controlled in annual appropriations acts

Discretionary spending

A payment made to stockholders (or in Alaska's case, residents) from the interest generated by an investment

Dividend

The Unfunded Mandates Reform Act (UMRA) 1995

Dramatically curtailed the practice of imposing unfunded mandates on state governments.

A service that the government must provide to those eligible, regardless of cost, is called ______.

Entitlement

Governmental Accounting Standards Board (GASB)

Established by the Financial Accounting Foundation to develop guidelines for financial accounting and reporting by state and local governmental units.

Taxes levied on a person's holdings after that person's death are known as?

Estate taxes

Taxes on alcohol, tobacco and other similar products that are designed to raise revenues and reduce use.

Excise or sin taxes

a system of delivering public services in which the federal government picks up most of the costs while states take responsibility for administering the services (ie., medicaid)

Fiscal Federalism

The annual accounting period used by a government

Fiscal year

Taxes that do not alter spending habits or distort the distribution of resources:

Focused consumption taxes

Bonds issued by states, counties, cities and towns to fund large projects as well as operating budgets. Income from such bonds is exempt from federal taxes and from state and local taxes for the investors who live in the state where they are issued.

Municipal bonds

Quill Corp. v. North Dakota (1992)

PHYSICAL PRESENCE FOR SALES AND USE TAX; Quill was a mail-order vendor with no other physical presence in ND; court ruled that taxpayer must have PHYSICAL PRESENCE in a a state to require collection of sales or use tax for purchases made by in-state customers because the number of separate jurisdictions would restrict interstate commerce

A system of taxation in which the rate paid reflects ability to pay

Progressive tax system

Taxes levied on all taxpayers regardless of income or ability to pay, placing proportionately more of a burden on those with lower incomes.

Regressive taxes

Investments secured by the revenue generated by a state or a municipal project (new toll road)

Revenue bonds

The money governments bring in, mainly from taxes

Revenues

Taxes levied by state and local governments on purchases

Sales taxes

A measurement of taxes paid as a proportion of income

Tax burden

A measure of the ability to pay taxes

Tax capacity

A measure of taxes paid relative to the ability to pay taxes

Tax effort

GASB 45 (2004)

a rule that mandated that states tally and disclose the cost of health care benefits pledget to current and retired state employees.

Investments secured by the taxing power of the jurisdiction that issues them

General obligation bonds

There are two types of bonds:

General obligations and Revenue

Taxes imposed on money transfers made during an individual's lifetime

Gift taxes

Taxes on wages and interests earned. Account for roughly 10% of total state and local tax revenues

Income taxes

Money collected from contributions, assessments, insurance premiums and payroll taxes

Insurance trust funds

Funds provided by the federal government to state governments and by state governments to local governments

Intergovernmental transfers

Proposition 2 1/2

Massachusetts voters - capped property tax increases at 2.5%.

Most state and local governments budget for one fiscal year. True or False?

True

Charges levied by governments in exchange for services are called ____.

User fees