Description
The main source of revenue for government agencies is taxes. In the United States, each level of government has the authority to tax; these taxes come in many shapes and sizes. There are taxes on retail sales, property, income, and many other elements of the market economy. The viability of a government’s operations, programs, and services depends on a diverse and stable tax base which includes having a variety of taxes from which to draw adequate and constant revenue. Although taxes help support government operations, not all taxes are fair and equitable. For example, taxes on goods and services are considered inequitable, as poorer people spend more of their income on purchases necessary for everyday life that are subject to sales tax. Even though they may not spend as much as affluent persons, they spend a greater share of their income and are therefore paying more in proportion to their income.
Mikesell, J. L. (2018). Fiscal administration: Analysis and applications for the public sector (10th ed.). Boston, MA: Wadsworth.
- Chapter 8, “Taxation: Criteria for Evaluating Revenue Options” (pp. 354-400)
- Chapter 9, “Major Tax Structures: Income Taxes” (pp. 389-433)
- Chapter 10, “Major Tax Structures: Taxes on Goods and Services” (pp. 441–481)
- Chapter 11, “Major Tax Structures: Property Taxes” (pp. 488–528)
TRANSCRIPT of required media is attached as well
Discussion: Tax Equity and Fairness
Where you reside, do you pay taxes on goods and services? If so, do you believe these taxes affect low-income people more than high-income people? How high is your property tax, and how does it affect the quality of your public services—such as schools and fire services—as compared to other locations? These questions all relate to tax equity. The taxes governments require for revenue include property, income, sales (on goods and services), and others. Some of these taxes are perceived as unfair or unjust, depending on such things as what is being taxed and who has the heaviest tax burden. For this Discussion, review the assigned readings in the Mikesell text. Think about tax structures and whether they seem to fit with your understanding of concepts of equity and fairness.
With these thoughts in mind:
By Day 4
Post an evaluation of two types of taxes (e.g., property, income, sales, etc.) using the criteria in the Mikesell text. Then, explain whether you consider the taxes fair and equitable, and why. Describe how tax equity coexists with a government’s need to collect taxes for revenue.
Be sure to support your posting and responses with specific references to the Learning Resources as well as at least one more scholarly resource
Budget Management Functions: Revenue
Budget Management Functions: Revenue
Program Transcript
[MUSIC PLAYING]
NARRATOR: In this video program Jacqueline Byers describes how
governments assure that they have the revenue they need to function.
JACQUELINE BYERS: Well, the first thing that governments have to do to make
sure that they have revenue to meet their needs, is to make sure they have a
diversified portfolio of revenue sources. It’s a very interesting thing when you look
at all the different revenue sources that are available to local governments, and
realize that each one of them has something that’s wrong with it.
Some of them are very, very dependent on the economy. An example is sales
tax. Sales tax is a big component of revenue for a large majority of counties in
these country, cities, et cetera. Even though it is primarily a state tax, and most of
the state’s local governments have the authority to levy an additional penny, or
two, or half a cent, or whatever the state law allows, on to the state tax for their
own purposes.
So revenue from sales tax is a pretty good source of revenue for them.
Governments like sales tax, as long as they can address the regressivity of it. But
the reason they like sales tax is everybody who buys, pays sales tax. That
means it’s not a tax that’s always just borne by the people who live in the
community. Especially, if they have something that attracts people to the
community. A shopping center. Some kind of tourism occasion. Et cetera. So
sales tax is a wonderful tax. It’s largely exported, as well as, something that the
local’s pay. So it’s got some benefits to it.
Many social scientist complain about sales tax. Sales taxes are a very lucrative
source of revenue for many local governments, but they do have a tendency to
be regressive. By regressive, I mean that they hit hardest to people who can
least afford them. Many low income people spend the majority of their income on
subsistence items. Food, clothing, school supplies for their kids, gasoline, et
cetera. And social scientists believe that sales taxes on these particular goods
are particularly onerous for people in those situations. And indeed they are.
Many local governments are allowed by state law– and in some cases a state
has done it– to put a lesser amount of sales tax on those particular kinds of
goods. As an example, in nearby Virginia the tax on food is $0.025. The tax on
everything else is $0.05. The same kind of thing goes on in many other states. In
some states they don’t tax them at all. Food is taxed sales tax free. Clothes are
sales tax free.
©2014 Laureate Education, Inc.
1
Budget Management Functions: Revenue
And then goodwill. Many governments will have what’s called a sales tax holiday.
Those sales tax holidays occur just about the time everybody’s buying school
supplies, and clothes, new lunch boxes for their kids to go back to school. And
they get a week where they can make all those purchases without paying any
sales tax. And those are the kinds of ways that many governments have
addressed the concerns of the social scientists about the regressivity of sales
taxes.
One of the first things that happens when the economy goes south, is sales tax
goes down. That’s what I mean by having a diversified portfolio. If you were
dependent solely on sales tax, you could be in trouble pretty fast.
Property tax is another one that most governments have the authority to collect.
Property tax is tied to the value of the housing stock, and the commercial
property in the community. And they annually assess, and they levy a percentage
tax on the value of those houses. And the commercial buildings, of course. Well,
guess what? When the value of that particular type of property goes down, that
revenue source goes thing also. That’s why you’ve got to have a diversified
revenue portfolio.
You need fees. You have licenses. All kinds of things. Tourism dollars. Hotelmotel tax dollars. And you know what else you need a good diversified revenue
portfolio? Investments. Of course, in certain economies that’s not always the
wisest move. But investments actually help lots of local governments. They
borrow money, or they invest money. Many governments will pull their payrolls
out of their invested money, or out of their revenue sources, or their banks, on
Monday. Invest it in short-term investments at the state investment pool– of a
similar type sources that have very small investment windows, three or four days.
And they will invest that money, maybe pool 80% of what they need. And in the
course of the week, they can earn enough to make their full payroll on Friday.
And they pool it up. That’s another source of revenue.
Other sources of revenue can be all of the kinds of things that we take for
granted. The people who repair your shoes, cut your hair, trim your nails, all of
those people have regulatory rules that apply to them, they need certifications,
they need licenses. Those are fees. When you have a library book that’s late, you
pay a fine. That’s revenue to the local government. When you take a course at
the recreation center, that’s revenue to the local governments. So you look at all
of the different types of revenue that are available, and you make sure you have
a good diversified portfolio so that you can weather most storms with your
revenue sources.
Many governments are clamoring for alternative revenue sources. In some
states, cities have authority to do franchise fees and counties don’t. In other
states, cities can have utilities and charge fees on those. And some cities can,
some cities can’t, counties can’t. What counties, cities, and other units of
©2014 Laureate Education, Inc.
2
Budget Management Functions: Revenue
government all across this country are clamoring for is alternative revenue
sources. Many of the ones that we conventionally use to finance government
right now– the ones that we recognize as citizens, sales tax, property tax,
licenses, and fees– are about where people will tolerate them. The public is at
the point where they don’t want to be taxed any more in those particular arenas.
The problem, very simply, is that state law doesn’t authorize many other revenue
sources.
Of the alternative sources the governments are looking at, one is, of course, sin
taxes. And that, of course, depends on state law. Whether you have the authority
to use alcohol and tobacco as a basis for a tax structure. And that is dependent
on whether you state law allows you to do that in your local government.
The other one that’s really catching on is gambling. And it’s an interesting split
that it creates in many communities. Many of the clergy don’t like gambling. They
say that it’s against all principles, and they preach from the pulpits against it. And
everyday Joe Schmo doesn’t care. Because they know that their friends are
going to gamble anyway, and if they’re going across the state line leaving their
money in South Carolina and they live in Georgia, well, we may as well have
gambling here and keep the money at home.
So many people don’t have strong viewpoints, especially if they’re not gamblers.
But gambling, generally, is the kind of a extra revenue source that brings with it
its own problems. We’ve got lots of studies that show wherever gambling occurs,
crime increases. So that creates another expenditure for local governments,
because they have to provide the public safety that’s needed around the
gambling venues.
Also, in many places where they have legalized gambling they designate that
money for some specific purpose. So it doesn’t really go in to relieve the general
budgetary needs of the government. It goes to education, or building something,
or for capital assets, or something like that. But gambling is one of the things that
many, many governments are looking at as a source of alternative revenue.
Budget Management Functions: Revenue
Additional Content Attribution
Images:
Olvey, B.D. (1977). ARC Identifier 6518668 /Local Identifier 330-CFD-DN-SD-0110120. A close up shot of the slum-like conditions outside Zetra Stadium at
Sarajevo, Bosnia- Herzegovina. The stadium was the site of the 1984 Olympic
Figure Skating events, 01/02/1997 [photograph]. Department of Defense.
National Archives at College Park, 8601 Adelphi Road, College Park, MD.
©2014 Laureate Education, Inc.
3
Budget Management Functions: Revenue
A Virginia state welcome sign at a Virginia welcome center on I-95. (2009).
Retrieved from http://en.wikipedia.org/wiki/File:Virginia_new_sign.jpg
Gillette, B. (1972). ARC Identifier 543703/Local Identifier 412-DA-1210. New
Beer Bottles On Assembly Line After Being Molded from 100% Old Glass. Part of
a New Glass Recycling Process, Columbine Glass Company, 06/1972
[photograph]. Environmental Protection Agency. National Archives at College
Park, 8601 Adelphi Road, College Park, MD.
Schulke, F. (1974). ARC Identifier 558268/Local Identifier 412-DA-15818. A Beer
Stein is Raised by a Member of the Concord Singers, A Group Which Sings
German Songs in New ULM, Minnesota. They are Trying to Keep the Town’s
Heritage Alive [photograph]. Environmental Protection Agency. National Archives
at College Park, 8601 Adelphi Road, College Park, MD.
ARC Identifier 6365622/Local Identifier 330-CFD-DF-ST-83-05480. LT. Charles
D. Rice enjoys a cigar after his release from a prisoner of war camp, 01/01/1973
[photograph]. Department of Defense;National Archives at College Park, 8601
Adelphi Road, College Park, MD.
Stoughton, C.W. (1963). ARC Identifier 194268. Hyannisport Weekend.
President Kennedy with cigar and New York Times, 08/31/1963 [photograph].
White House Photograph Office. National Archives at College Park, 8601 Adelphi
Road, College Park, MD.
Grow, C.G. (2002). ARC Identifier 6525345 /Local Identifier 330-CFD-DM-SD-0206359. Sergeant Ryan Ross, USMC, a member of Engineer Platoon, 26th
Marine Service Support Group, smokes a cigarette while standing guard at the
front gate of the forward operating base located at Kandahar International
Airport, during Operation Enduring Freedom, 1/16/2002 [photograph].
Department of Defense. National Archives at College Park, 8601 Adelphi Road,
College Park, MD.
Paik, K. (1973). ARC Identifier 553505/Local Identifier 412-DA-11046. Donny, a
Neighborhood Youngster, Drags on a Cigarette Passed to him by an Older Boy,
10/1973[photograph]. Environmental Protection Agency. National Archives at
College Park, 8601 Adelphi Road, College Park, MD.
ARC Identifier 6654770/Local Identifier 330-CFD-DM-SD-05-14537. A US Marine
Corps (USMC) Marine, Marine Wing Support Squadron 273 (MWSS-273), takes
a smoking break in the Smoking Pit at Al Asad Air Base (AB), Al Anbar Province,
Iraq, during Operation IRAQI FREEDOM, 05/07/2004 [photograph]. Department
©2014 Laureate Education, Inc.
4
Budget Management Functions: Revenue
of Defense; National Archives at College Park, 8601 Adelphi Road, College Park,
MD.
St. Gil, M. (2004). ARC Identifier 554907/Local Identifier 412-DA-12455. Two
Girls Smoking Pot during an Outing in Cedar Woods Near Leakey, Texas,
(Taken with Permission), 05/1973 [photograph]. Department of Defense. National
Archives at College Park, 8601 Adelphi Road, College Park, MD.
Highsmith, C.M. (between 1980 and 2006). Vintage slot machine at the Casino
Legends Hall of Fame at the Tropicana Hotel and Casino in Las Vegas, Nevada
[Photograph]. Reproduction number: LC-DIG-highsm-13666. Library of Congress
Prints and Photographs Division Washington, D.C.
Highsmith, C.M. (between 1980 and 2006). Slot machine arcade at the Tropicana
Hotel and Casino in Las Vegas, Nevada [Photograph]. Reproduction number:
LC-DIG-highsm-13669. Library of Congress Prints and Photographs Division
Washington, D.C.
Highsmith, C.M. (between 1980 and 2006). Casino and leaded-glass ceiling at
the Tropicana Hotel, Las Vegas, Nevada [Photograph]. Reproduction number:
LC-DIG-highsm-16289. Library of Congress Prints and Photographs Division
Washington, D.C.
Highsmith, C.M. (between 1980 and 2006). Tropicana Casino, Las Vegas,
Nevada [Photograph]. Reproduction number: LC-DIG-highsm-17875. Library of
Congress Prints and Photographs Division Washington, D.C.
Music:
Creative Support Services
Los Angeles, CA
Dimension Sound Effects Library
Newnan, GA
Narrator Tracks Music Library
Stevens Point, WI
Signature Music, Inc
Chesterton, IN
Studio Cutz Music Library
Carrollton, TX
©2014 Laureate Education, Inc.
5
Purchase answer to see full
attachment
Budget Management Functions: Revenue
Program Transcript
[MUSIC PLAYING]
NARRATOR: In this video program Jacqueline Byers describes how
governments assure that they have the revenue they need to function.
JACQUELINE BYERS: Well, the first thing that governments have to do to make
sure that they have revenue to meet their needs, is to make sure they have a
diversified portfolio of revenue sources. It’s a very interesting thing when you look
at all the different revenue sources that are available to local governments, and
realize that each one of them has something that’s wrong with it.
Some of them are very, very dependent on the economy. An example is sales
tax. Sales tax is a big component of revenue for a large majority of counties in
these country, cities, et cetera. Even though it is primarily a state tax, and most of
the state’s local governments have the authority to levy an additional penny, or
two, or half a cent, or whatever the state law allows, on to the state tax for their
own purposes.
So revenue from sales tax is a pretty good source of revenue for them.
Governments like sales tax, as long as they can address the regressivity of it. But
the reason they like sales tax is everybody who buys, pays sales tax. That
means it’s not a tax that’s always just borne by the people who live in the
community. Especially, if they have something that attracts people to the
community. A shopping center. Some kind of tourism occasion. Et cetera. So
sales tax is a wonderful tax. It’s largely exported, as well as, something that the
local’s pay. So it’s got some benefits to it.
Many social scientist complain about sales tax. Sales taxes are a very lucrative
source of revenue for many local governments, but they do have a tendency to
be regressive. By regressive, I mean that they hit hardest to people who can
least afford them. Many low income people spend the majority of their income on
subsistence items. Food, clothing, school supplies for their kids, gasoline, et
cetera. And social scientists believe that sales taxes on these particular goods
are particularly onerous for people in those situations. And indeed they are.
Many local governments are allowed by state law– and in some cases a state
has done it– to put a lesser amount of sales tax on those particular kinds of
goods. As an example, in nearby Virginia the tax on food is $0.025. The tax on
everything else is $0.05. The same kind of thing goes on in many other states. In
some states they don’t tax them at all. Food is taxed sales tax free. Clothes are
sales tax free.
©2014 Laureate Education, Inc.
1
Budget Management Functions: Revenue
And then goodwill. Many governments will have what’s called a sales tax holiday.
Those sales tax holidays occur just about the time everybody’s buying school
supplies, and clothes, new lunch boxes for their kids to go back to school. And
they get a week where they can make all those purchases without paying any
sales tax. And those are the kinds of ways that many governments have
addressed the concerns of the social scientists about the regressivity of sales
taxes.
One of the first things that happens when the economy goes south, is sales tax
goes down. That’s what I mean by having a diversified portfolio. If you were
dependent solely on sales tax, you could be in trouble pretty fast.
Property tax is another one that most governments have the authority to collect.
Property tax is tied to the value of the housing stock, and the commercial
property in the community. And they annually assess, and they levy a percentage
tax on the value of those houses. And the commercial buildings, of course. Well,
guess what? When the value of that particular type of property goes down, that
revenue source goes thing also. That’s why you’ve got to have a diversified
revenue portfolio.
You need fees. You have licenses. All kinds of things. Tourism dollars. Hotelmotel tax dollars. And you know what else you need a good diversified revenue
portfolio? Investments. Of course, in certain economies that’s not always the
wisest move. But investments actually help lots of local governments. They
borrow money, or they invest money. Many governments will pull their payrolls
out of their invested money, or out of their revenue sources, or their banks, on
Monday. Invest it in short-term investments at the state investment pool– of a
similar type sources that have very small investment windows, three or four days.
And they will invest that money, maybe pool 80% of what they need. And in the
course of the week, they can earn enough to make their full payroll on Friday.
And they pool it up. That’s another source of revenue.
Other sources of revenue can be all of the kinds of things that we take for
granted. The people who repair your shoes, cut your hair, trim your nails, all of
those people have regulatory rules that apply to them, they need certifications,
they need licenses. Those are fees. When you have a library book that’s late, you
pay a fine. That’s revenue to the local government. When you take a course at
the recreation center, that’s revenue to the local governments. So you look at all
of the different types of revenue that are available, and you make sure you have
a good diversified portfolio so that you can weather most storms with your
revenue sources.
Many governments are clamoring for alternative revenue sources. In some
states, cities have authority to do franchise fees and counties don’t. In other
states, cities can have utilities and charge fees on those. And some cities can,
some cities can’t, counties can’t. What counties, cities, and other units of
©2014 Laureate Education, Inc.
2
Budget Management Functions: Revenue
government all across this country are clamoring for is alternative revenue
sources. Many of the ones that we conventionally use to finance government
right now– the ones that we recognize as citizens, sales tax, property tax,
licenses, and fees– are about where people will tolerate them. The public is at
the point where they don’t want to be taxed any more in those particular arenas.
The problem, very simply, is that state law doesn’t authorize many other revenue
sources.
Of the alternative sources the governments are looking at, one is, of course, sin
taxes. And that, of course, depends on state law. Whether you have the authority
to use alcohol and tobacco as a basis for a tax structure. And that is dependent
on whether you state law allows you to do that in your local government.
The other one that’s really catching on is gambling. And it’s an interesting split
that it creates in many communities. Many of the clergy don’t like gambling. They
say that it’s against all principles, and they preach from the pulpits against it. And
everyday Joe Schmo doesn’t care. Because they know that their friends are
going to gamble anyway, and if they’re going across the state line leaving their
money in South Carolina and they live in Georgia, well, we may as well have
gambling here and keep the money at home.
So many people don’t have strong viewpoints, especially if they’re not gamblers.
But gambling, generally, is the kind of a extra revenue source that brings with it
its own problems. We’ve got lots of studies that show wherever gambling occurs,
crime increases. So that creates another expenditure for local governments,
because they have to provide the public safety that’s needed around the
gambling venues.
Also, in many places where they have legalized gambling they designate that
money for some specific purpose. So it doesn’t really go in to relieve the general
budgetary needs of the government. It goes to education, or building something,
or for capital assets, or something like that. But gambling is one of the things that
many, many governments are looking at as a source of alternative revenue.
Budget Management Functions: Revenue
Additional Content Attribution
Images:
Olvey, B.D. (1977). ARC Identifier 6518668 /Local Identifier 330-CFD-DN-SD-0110120. A close up shot of the slum-like conditions outside Zetra Stadium at
Sarajevo, Bosnia- Herzegovina. The stadium was the site of the 1984 Olympic
Figure Skating events, 01/02/1997 [photograph]. Department of Defense.
National Archives at College Park, 8601 Adelphi Road, College Park, MD.
©2014 Laureate Education, Inc.
3
Budget Management Functions: Revenue
A Virginia state welcome sign at a Virginia welcome center on I-95. (2009).
Retrieved from http://en.wikipedia.org/wiki/File:Virginia_new_sign.jpg
Gillette, B. (1972). ARC Identifier 543703/Local Identifier 412-DA-1210. New
Beer Bottles On Assembly Line After Being Molded from 100% Old Glass. Part of
a New Glass Recycling Process, Columbine Glass Company, 06/1972
[photograph]. Environmental Protection Agency. National Archives at College
Park, 8601 Adelphi Road, College Park, MD.
Schulke, F. (1974). ARC Identifier 558268/Local Identifier 412-DA-15818. A Beer
Stein is Raised by a Member of the Concord Singers, A Group Which Sings
German Songs in New ULM, Minnesota. They are Trying to Keep the Town’s
Heritage Alive [photograph]. Environmental Protection Agency. National Archives
at College Park, 8601 Adelphi Road, College Park, MD.
ARC Identifier 6365622/Local Identifier 330-CFD-DF-ST-83-05480. LT. Charles
D. Rice enjoys a cigar after his release from a prisoner of war camp, 01/01/1973
[photograph]. Department of Defense;National Archives at College Park, 8601
Adelphi Road, College Park, MD.
Stoughton, C.W. (1963). ARC Identifier 194268. Hyannisport Weekend.
President Kennedy with cigar and New York Times, 08/31/1963 [photograph].
White House Photograph Office. National Archives at College Park, 8601 Adelphi
Road, College Park, MD.
Grow, C.G. (2002). ARC Identifier 6525345 /Local Identifier 330-CFD-DM-SD-0206359. Sergeant Ryan Ross, USMC, a member of Engineer Platoon, 26th
Marine Service Support Group, smokes a cigarette while standing guard at the
front gate of the forward operating base located at Kandahar International
Airport, during Operation Enduring Freedom, 1/16/2002 [photograph].
Department of Defense. National Archives at College Park, 8601 Adelphi Road,
College Park, MD.
Paik, K. (1973). ARC Identifier 553505/Local Identifier 412-DA-11046. Donny, a
Neighborhood Youngster, Drags on a Cigarette Passed to him by an Older Boy,
10/1973[photograph]. Environmental Protection Agency. National Archives at
College Park, 8601 Adelphi Road, College Park, MD.
ARC Identifier 6654770/Local Identifier 330-CFD-DM-SD-05-14537. A US Marine
Corps (USMC) Marine, Marine Wing Support Squadron 273 (MWSS-273), takes
a smoking break in the Smoking Pit at Al Asad Air Base (AB), Al Anbar Province,
Iraq, during Operation IRAQI FREEDOM, 05/07/2004 [photograph]. Department
©2014 Laureate Education, Inc.
4
Budget Management Functions: Revenue
of Defense; National Archives at College Park, 8601 Adelphi Road, College Park,
MD.
St. Gil, M. (2004). ARC Identifier 554907/Local Identifier 412-DA-12455. Two
Girls Smoking Pot during an Outing in Cedar Woods Near Leakey, Texas,
(Taken with Permission), 05/1973 [photograph]. Department of Defense. National
Archives at College Park, 8601 Adelphi Road, College Park, MD.
Highsmith, C.M. (between 1980 and 2006). Vintage slot machine at the Casino
Legends Hall of Fame at the Tropicana Hotel and Casino in Las Vegas, Nevada
[Photograph]. Reproduction number: LC-DIG-highsm-13666. Library of Congress
Prints and Photographs Division Washington, D.C.
Highsmith, C.M. (between 1980 and 2006). Slot machine arcade at the Tropicana
Hotel and Casino in Las Vegas, Nevada [Photograph]. Reproduction number:
LC-DIG-highsm-13669. Library of Congress Prints and Photographs Division
Washington, D.C.
Highsmith, C.M. (between 1980 and 2006). Casino and leaded-glass ceiling at
the Tropicana Hotel, Las Vegas, Nevada [Photograph]. Reproduction number:
LC-DIG-highsm-16289. Library of Congress Prints and Photographs Division
Washington, D.C.
Highsmith, C.M. (between 1980 and 2006). Tropicana Casino, Las Vegas,
Nevada [Photograph]. Reproduction number: LC-DIG-highsm-17875. Library of
Congress Prints and Photographs Division Washington, D.C.
Music:
Creative Support Services
Los Angeles, CA
Dimension Sound Effects Library
Newnan, GA
Narrator Tracks Music Library
Stevens Point, WI
Signature Music, Inc
Chesterton, IN
Studio Cutz Music Library
Carrollton, TX
©2014 Laureate Education, Inc.
5
Purchase answer to see full
attachment
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