Journal Article

Can state and local governments rely on alternative tax sources?


Abstract: State governments are much more likely than their local counterparts to depend on taxes other than sales, property, and personal income taxes. Excises on alcohol, beer, tobacco, gambling, and business taxes are among the alternative taxes. Local governments, on the other hand, are more likely to impose user fees. Reliance on these alternative state tax sources in aggregate has diminished over the past several decades, despite a pattern of rate increases and new gambling alternatives. Competitive pressures between states and with the federal government are likely to continue limiting reliance on these alternatives. Further, the same competitive forces are reshaping state corporate taxes to operate more like taxes on consumption than the traditional focus on taxing corporate production. In addition, states are seeking to broaden the set of business taxpayers to include those exploiting the state?s market and noncorporate businesses.

Keywords: Local finance; State finance;

Status: Published in Proceedings of a conference co-hosted by the Federal Reserve Bank of St. Louis and the Weidenbaum Center at Washington University in St. Louis on the current status of state and local public finance, fiscal federalism in the United States, an economic evaluation of state and local taxes, and non-traditional revenue sources for state and local governments, April 9, 2010.

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File(s): File format is application/pdf http://research.stlouisfed.org/publications/red/2010/01/Fox.pdf

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Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Regional Economic Development

Publication Date: 2010

Issue: Oct

Pages: 88-101