State Income Tax Treatment of the Elderly

The state and local tax treatment of the elderly varies significantly from state to state. In this article, we analyze the differences in effective tax rates for the state personal income tax for elderly versus non-elderly taxpayers. We find that in a majority of states, the average effective tax rate facing the elderly is significantly lower than that of non-elderly taxpayers. The consequences of this tax rate difference may impact long-term state income tax revenues as the elderly population continues to grow.     

Fiscal Structure and the Post-Proposition 13 Fiscal Regime in California's Cities

Two and a half decades after the passage of Proposition 13 in 1978, California state and local governments continue to feel the intended and unintended effects of tax and expenditure limitations. While considerable time has passed since voters enacted Proposition 13, the effects of the property tax revolt continue to be dramatic. This article examines the fiscal structure of California's city governments from 1972 to 2002. The analysis reveals that California's cities have become less reliant upon property tax revenues and more reliant upon charges and fees, and have not increased reliance upon sales tax revenues as much as expected.     

On the political and fiscal determinants of income redistribution under federalism and democracy: evidence from Germany

Several recent studies suggest that transfers from central to regional governments are motivated by political considerations. In this paper we examine if this is also the case for transfers from regional to central governments in the context of the German fiscal equalization system. We examine the factors that contribute to differences in tax revenues across German states. The evidence indicates that both fiscal incentives and political factors can explain these differences, although in Germany the former are more important. Moreover, accounting for fiscal institutions has important consequences for the empirical assessment of political influences on taxation. Overall we find that the political affiliation of the state governor is an important factor in explaining differences in state tax revenues. Thus, the right-wing party (CDU/CSU) is effective in relaxing the tax burden at the state level. In contrast, partisan alignment between the state government and the federal government loses its importance once fiscal conditions enter the empirical model.     

Effects of the Form of Government and Property Tax Limits on Local Finance in the Context of Revenue and Expenditure Simultaneity

This paper examines the impact of the form of government and state‐imposed property tax limits on municipal finance. We suggest that municipal revenues and expenditures are determined concurrently and estimate revenue and expenditure functions as simultaneous equations. We use the instrumental variable approach and fixed effects to address revenue and expenditure endogeneity. By testing the model on a cross‐section of rich municipal data for fiscal year 2002, we find evidence that revenues and expenditures are simultaneously determined, that potentially binding state‐imposed property tax limits effectively restrict local revenues and that the form of government is a significant predictor of local expenditures.     

The role of tax preparers in tax compliance

This paper assesses the influence of tax preparers on tax compliance. Using data from the Internal Revenue Service's (IRS) Taxpayer Compliance Measurement Program and an index of legal ambiguity based on Revenue Rulings, the impact of preparation mode (paid third party vs. self) on compliance at the level of the return line item is probed. The results suggest that preparers contribute to compliance by enforcing legally clear requirements but also contribute to noncompliance, as measured by the IRS, by helping taxpayers take advantage of legal ambiguity. Furthermore, an analysis of a campaign to enforce estimated tax requirements conducted by the Pennsylvania Department of Revenue suggests that tax preparers are also an important network for communicating tax agency enforcement priorities to taxpayers.An earlier version of this paper was prepared for the conference on Federal/State Research sponsored by the U.S. Internal Revenue Service.     

Broadening Benefits from Natural Resource Extraction: Housing Values and Taxation of Natural Gas Wells as Property

We study the effects of the property tax base shock caused by natural gas drilling in the Barnett Shale in Texas—a state that taxes oil and gas wells as property. Over the boom and bust in drilling, housing appreciation closely followed the oil and gas property tax base, which expanded the total tax base by 23 percent at its height. The expansion led to a decline in property tax rates while maintaining or increasing revenues to schools. Overall, each $1 per student increase in the oil and gas property tax base increased the value of the typical home by $0.15. Some evidence suggests that the cumulative density of wells nearby may lower housing values, indicating that drilling could reduce local welfare without policies to increase local public revenues.     

Tax and expenditure limitations and the fiscal relationships between state and local governments

This paper uses comprehensive data on state and local tax and spending limitations for forty-nine states between 1976 and 1990 to estimate the effects of these limits on the fiscal relationships between state and local government. Results indicate that tax and spending limits on local governments are only partially effective in reducing revenues because political agents bypass limitations by transferring revenue reliance to unconstrained revenue sources, or because unconstrained levels of government take on additional revenue responsibilities. In particular, the empirical analysis demonstrates that binding local government fiscal constraints are associated with reductions in local revenues and increases in state aid to local governments. In contrast, state government limitations are related to reductions in both state and local own source revenues.     

Budgeting during a Recession Phase of the Business Cycle: The Georgia Experience

This article describes the impact of the nation-wide recession on Georgia revenue and spending decisions in the 2002 and 2003 fiscal years. The state's strong economy and conservative revenue estimating practices historically provided a hedge against revenue shortfalls during a recession phase of the business cycle. However, when state revenue collections for FY 2002 were 5 percent less than collections for the prior fiscal year, several gap-closing measures became necessary, including state agency spending reductions and substitution of bond proceeds for tax revenues. These revenue and expenditure gap-closing measures were intended to enable the governor to achieve his policy initiatives while maintaining a balanced budget. The state's Rainy Day Fund remained full and was held in reserve for budget balancing in FY 2004, if necessary. Budget balancing during the current recession has been made possible by the state's practice of not overcommitting to program increases and tax cuts during the expansion phase of the business cycle, and by effectively framing the issue of fiscal restraint.     

Fiscal reform and governmental efficiency: Hanging tough

Many surveys of taxpayers in the wake of the fiscal reforms of the 1970's have indicated that frustration with the inefficiency and wastefulness of government is a major motive behind their votes for tax and expenditure limitations. There is a strongly held belief that government can do as much as it is currently doing with much less money. There is also a widespread belief that by reducing the dollar resources available to governments, they will be forced to become less wasteful and more efficient. This paper argues that increased efficiency in local government is an unlikely consequence of the fiscal reform movement. Indeed, lessened efficiency is a more probable outcome.We are indebted to Thomas Anton, Peter deLeon and an anonymous referee for comments on an earlier draft. The authors are, of course, solely responsible for all assertions and any remaining errors.     

Intrametropolitan financial flows under tax increment financing

Under tax increment financing (TIF), the property tax revenues of county, school and other local governments are used to finance the development expenditures of cities. This paper examines the tax shifting that results when TIF is used by numerous cities in a single urban area. Development subsidies for governments and individuals are distinguished and TIF is shown to have potential negative financial impacts on some taxpayers within a metropolitan area unless two important conditions are met. Data for cities in Milwaukee County, Milwaukee are used to demonstrate the potential tax shifting that results when TIF is used in a large urban area.     

INFORMAL SECTOR TAX ADMINISTRATION IN ZIMBABWE

Governments have to raise revenue to finance public goods. This study analyses the challenges that Zimbabwe, like most developing countries, faces in attempting to collect taxes from its informal sector. Because the so‐called informal sector forms a large and sometimes growing component of the economy, collecting sufficient revenues to fund expenditure requires tax authorities to seek ways to collect revenues from those earning their incomes in the informal sector. There has been an attempt to collect taxes from the informal sector in Zimbabwe over the past 8 years. Although the actual amount collected from this sector has increased, an evaluation of the way taxes are administered needs to go beyond the amount of revenue collected. It needs to also look at issues such as the proportion of the informal sector paying these taxes, the amount collected as a proportion of total revenues, the costs incurred in collecting these taxes and the tax administration's ability to encourage quasi‐voluntary compliance. This study indicates that the levels of evasion (confirmed by the informal sector associations themselves), selective application of tax regulations and corruption are alarmingly high. These factors, together with the very high tax rates and sheer ignorance, operate as a serious disincentive in informal sector tax compliance resulting in very low revenues from this sector. Copyright © 2014 John Wiley & Sons, Ltd.     

Globalisierung und fiskalische Demokratie

This article addresses a dilemma: an effective tax state is a precondition for securing the political stability of economic globalization. But globalization, in the form of tax competition, undermines nation states’ capacity to democratically choose the level, structure and distribution of their tax revenues. To regain democratic fiscal self-determination, international regulation of tax competition is required. Yet, how can a single nation’s right to self-determination be delimited so that all nations can effectively exercise their right under conditions of fiscal interdependence? The article proposes a republican conception of fiscal self-determination and develops two principles of international tax policy and their institutionalization in an International Tax Organization (ITO).     

How Governments Respond to Business Demands for Tax Cuts: A Study of Corporate and Inheritance Tax Reforms in Austria and Sweden

How responsive are democratic governments to business demands for tax cuts? We research this question in comparative case studies of cuts in corporate taxes and inheritance taxes in Austria and Sweden. We find that governments, regardless of partisan composition, are responsive to business demands, but that fiscal and electoral goals attenuate responsiveness. In both countries, the limited revenues generated by inheritance taxation and greater alignment of business demands with middle‐class voter interests resulted in governments heading business demands for an abolition of this tax. Goal conflict were larger for corporate tax cuts. In both countries, governments tried to minimize these goal conflict by adopting compensatory policy measures, specifically measures to broaden the tax base and simultaneous tax cuts for low‐income groups. The findings suggest that the policy output of business‐friendly tax cuts reflect a balancing of conflicting goals, rather than outright business dominance.     

Leviathans, federal transfers, and the cartelization hypothesis

Federal fiscal arrangements are argued to give rise to tacit collusion among competing Leviathans (Brennan and Buchanan, The Power to Tax, CUP, 1980). Though frequently encountered in academic and policy discussions, the cartelization hypothesis has rarely been scrutinized formally. This paper explores the effect of federal equalizing transfers on Leviathans engaged in tax competition. Contrary to the hypothesis, equalization is found to potentially complement tax competition in taming the Leviathan by implicitly taxing tax revenues extracted by the Leviathan. Thus, transfers might be an appropriate constitutional provision against fiscal expropriation.     

Do supermajority rules limit or enhance majority tyranny? evidence from the US States, 1960–1997

Buchanan and Tullock (1962) demonstrates that supermajority rules can reduce tyranny of majority problems in a democracy. However, recent theoretical work by Dixit, Grossman, and Gul (2000) postulates that this static analysis of supermajority rules may be inadequate to explain political decisions in a dynamic setting. In fact, supermajority rules may increase the incidence of majority tyranny because of rotating political representation. Using data from US state legislatures we examine the effect of supermajority rules on different categories of government expenditures and tax revenues during the latter half of the 20th century. We find supermajority rules have little effect on general government expenditures and tax revenues. However, supermajority rules are associated with lower public welfare transfers, which supports the traditional analysis of the fiscal effects of supermajority rules.     

Surplus Expenditures: A Case Study of Colorado

In this study the concept of surplus expenditures is introduced, and a theory of surplus expenditures is explored. The study examines the disposition of surplus revenues that emerged from the imposition of a binding tax and spending limit in Colorado. The study concludes that the accumulation of surplus revenue requires a major overhaul of budgetary reporting and decision making to reflect the impact of binding tax and spending limits on the budgetary process. The reporting recommendations are designed to make the budget more transparent and provide both taxpayers and legislators the information they need to make more rational decisions. The policy recommendations explore options for a more efficient and equitable disposition of surplus revenue.     

Changes in the Usage of Enterprise Funds by Large City Governments

Using a nationwide sample of large cities, this article analyzes changes in the use of enterprise funds during the past decade. The major findings are that (1) the aggregate number of enterprise funds increased, with the largest increases occurring in solid waste and drainage; (2) part of the increase was offset by the elimination of some enterprise funds, particularly in the area of recreational services; (3) 60 percent of the cities experienced one or more changes in the types of enterprise funds they used; (4) the revenues associated with most types of enterprise funds have increased at a faster rate than general fund revenues; and (5) some cities are using alternative fiscal structures (e.g., special revenue funds and discrete component units) to account for services that are reported as enterprise funds in other cities. A continuum of fiscal structures is presented as a framework for addressing why cities might choose one structure over another and what the possible implications of a particular fiscal structure might be.     

Cross‐Border Shopping and State Use Tax Liabilities: Evidence from eBay Transactions

Online commerce presents consumers with a convenient way of shopping outside of their local jurisdiction, and this online purchase decision is capable of affecting in significant ways the sales and use tax collections of state governments. However, the actual revenue impact has proven difficult to estimate. There is considerable work that examines the revenue impact of seller compliance with sales taxes. However, there is little work on buyer compliance with use taxes. In this paper, we investigate the potential impact of cross‐border shopping on state use tax liabilities of buyers, using data from the largest online consumer‐to‐consumer and business‐to‐consumer marketplace, eBay.com . We collect our own data on actual cross‐border shopping transactions from eBay, focusing upon a “representative” commodity classification and a “typical” day; these data consist of nearly 21,000 eBay listings generated by roughly 7,000 individual sellers with over 9,000 buyers. These data allow us to examine the extent of actual, not estimated, cross‐border shopping by buyers, and the subsequent potential impact of this cross‐border shopping on state use tax liabilities. Our results indicate that cross‐border shopping is highly prevalent on eBay, with out‐of‐state purchases accounting for on average 94 percent of the volume of a state's purchase transactions. Even so, given the limited volume of eBay‐based transactions relative to total sales transactions, the likely impact of cross‐border transactions on state use tax revenue streams is quite low, at least at present, typically less than one percent of actual state sales tax revenues.     

Congress, the Deficit, and Budget Reconciliation

President Clinton's veto of the 1995 reconciliation bill, the largest and most ambitious such legislation ever passed by Congress, was the first time a reconciliation bill was ever rejected by a president. It was also the first reconciliation bill in two decades to include a tax reduction rather than a tax increase. The fate of this bill, and its scope and contents, suggest the need to assess the evolution of reconciliation within the congressional budget process. In the early 1980s, Congress altered budget reconciliation procedures, putting in place a powerful new capability for deficit reduction. Reconciliation became the primary means within the budget process of restraining entitlement spending and increasing taxes as part of congressional efforts to reduce the deficit. Gramm-Rudman-Hollings magnified certain problems Congress encountered in using reconciliation to control entitlements, producing increased pressure to cut discretionary spending. While the Budget Enforcement Act of 1990 included new authority to use reconciliation to restrain entitlements, congressional spending priorities combined with the Peace Dividend to maintain the relative sanctuary entitlement programs have enjoyed. The limits of reconciliation as a deficit reduction tool, both in terms of increasing revenues and curtailing entitlements, are detailed. The inherent procedural advantages accorded to entitlements are contrasted with the treatment of discretionary programs, explaining in part the widening gulf between these two categories of spending. Congress has attempted, without success, to find alternatives to reconciliation. The failure of the seven-year, deficit-eliminating reconciliation bill of 1995 may indicate that certain Limits on the use of reconciliation may have been reached.     

论纳税人诚实推定权的入法途径

诚实推定权由纳税人财产权与人格尊严权衍生而来,在立法中加以确认有助于落实税收法定、践行量能课税和提高纳税人遵从度。诚实推定权借鉴了刑法上的无罪推定和民法上的善意推定,其基本内涵是税务机关认为纳税人有少缴税款嫌疑时,应由该机关承担举证责任,证明强度应达到优势证据标准。我国应在修改《税收征收管理法》时,明确表达纳税人享有诚实推定权,同时准确界分纳税人的协力义务和税务机关的举证责任,强调逃税行为必须具备主观故意的要件,合理限定税收检查权。诚实推定权入法将对税收征纳实践产生影响,提高现有“计税依据明显偏低”的认定标准,使纳税人的正当理由诉求更有可能被认可,对逃税行为的界定也将更为精确。