State and Local Taxation and Finance in a Nutshell
Authors:
Gelfand, M. David / Mintz, Joel A. / Salsich Jr., Peter W.
Edition:
3rd
Copyright Date:
2007
8 chapters
have results for tax
Chapter II. State and Local Government Revenue Sources 274 results (showing 5 best matches)
- A third form of death tax, the so-called “pick up” tax, is levied by all states, either in conjunction with inheritance or estate taxes or by itself. The “pick up” tax is related to the credit for state death taxes permitted under the federal estate tax. If a state inheritance or estate tax is not payable because of exemptions, or is less than the maximum state tax credit which a federal taxpayer can claim, a special state tax is imposed to take advantage of the federal estate tax credit, by “picking-up” the difference between the inheritance or estate tax and the maximum tax credit. When the decedent’s estate contains property in more than one state, the calculation of the “maximum state tax credit” is limited to that portion of the estate attributable to the taxing state.
- Local governments were slower to utilize sales taxes, mainly because states, which must delegate taxing authority to local governments (see II A(2)(a), above), have tended to guard consumption taxes as a source of revenue. The sales tax is, however, an important local revenue source in states where local property tax rates are severely limited; and local governments in two thirds of the states now levy sales taxes.
- In addition to broadly applicable general retail sales taxes, most states levy special sales taxes, also known as “excise taxes,” targeted at purchases of specific items. The most common excises are the cigarette or tobacco tax, the motor fuel tax, and the alcoholic beverages tax. The items subject to these excises are not taxed as a part of the general sales tax. Like the general sales tax, however, these excises are generally imposed on the seller, with the economic burden passed on to the consumer as a specific percentage of the item’s purchase price (see II E(2)(b), above).
- The gross receipts tax differs from the corporate income tax (see II D(1), above) because the gross receipts tax is levied on the total revenues received by the business rather than on its profits (revenues minus expenses). Though the general retail sales tax could technically be considered a type of gross receipts tax, it is usually distinguishable because it taxes retail sales and is intended to reach only the consumption of goods and services produced by particular business activities (see II E(2)(a), above). By contrast, the gross receipts tax is a tax on the business activity itself and, therefore, is sometimes treated as a license tax (see II G, below). Furthermore, the gross receipts tax is assessed as a percentage of the revenues received, regardless of the source of the revenue. For example, a merchant selling an item for $1.00 who adds 3 cents to the sales price to pass on to the purchaser the cost of his or her gross receipts tax payment will have gross receipts of $1.03....
- A variation of the entertainment tax is the hotel/motel room tax, which is a special sales tax paid on the rental of hotel and motel rooms. Funds derived from this tax often are earmarked for the support of cultural and performing arts attractions, as well as the promotion of local tourism efforts. The hotel/motel room tax has special appeal because of its potential for tax exportation. Apart from an occasional “getaway weekend” or second honeymoon, residents of the taxing jurisdiction rarely pay this tax, but their local government is able to reap its benefits.
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Chapter IV. State and Local Government Debt Financing and Capital Expenditures 72 results (showing 5 best matches)
- AD VALOREM TAX
- General obligation bonds are bonds issued by a public body that has the power to tax. They are obligations of that body which are payable from its general revenues raised by taxation and other revenue sources (see II B(2), above). These bonds are often referred to as “full faith and credit” obligations, because the debt is secured by the promise that both principal and interest will be paid through the exercise of the body’s taxing power unrestricted by the usual tax limits. ( , 40 N.Y.2d 731, 390 N.Y.S.2d 22, 358 N.E.2d 848 (1976), which is discussed in IV F(1), below). Tax limits are discussed in II B(2), above.
- In some states, the legislature or other governmental body is authorized to decide the question of additional payments from tax revenues if and when it arises. Under these circumstances, the bonds are referred to as “moral obligation bonds.” (See IV C(3), above.) Other states prohibit issuers from curing deficiencies in revenue bond retirement funds through the use of tax funds unless the bond issue—including the proviso that tax moneys can be used if needed—has first been approved at an election of qualified voters.
- The federal tax consequences of municipal securities were also profoundly affected by the Tax Reform Act of 1986, which amended the Internal Revenue Code in significant ways. For example, Section 265 of the amended Code prohibits the deduction of most expenses incurred in buying or owning municipal bonds ( interest income). However, state income taxes imposed on municipal bond interest remain deductible under Section 164 of the Code.
- At the time of issuance and sale, the issuing state or local government is required to provide for payment of the bonds through the levy of ad valorem taxes sufficient to cover the periodic payments, and the payment of principal when the bonds mature. The funds arising from the levy of these taxes are placed in a sinking fund where they will earn interest. The extent to which interest may be earned on the sinking funds of tax-exempt state and local bonds, however, is severely restricted by the arbitrage provisions of Sections 103(b) and 148 of the Internal Revenue Code, as well as pertinent IRS regulations. (See IV E(2), below.)
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Chapter I. Historical Introduction 6 results (showing 5 best matches)
- From the beginning, the state and local governments that relied upon a form of property tax had to supplement it with other kinds of taxes. The extent of diversification of revenue sources depended upon the economic conditions in particular geographic regions and the changes in those conditions over time. The most popular forms of diversification are taxes on production, use, or consumption of goods and services (sales, excise, use and gross receipts taxes). Diversification of revenue sources has permitted state and local governments to stabilize and increase their tax yields.
- The early features of American state and local government taxation evolved out of the fiscal systems of the American colonies. These systems varied somewhat, depending upon the economic conditions present in those various colonies. For example, in the New England colonies taxes were levied based upon ownership of land. (However, the modern property tax was not fully developed until the Nineteenth Century.) The Southern colonies, by contrast, primarily taxed imports and exports.
- This Nutshell begins with general revenue sources, then reviews budgetary matters and concludes with debt financing. Chapter II This Nutshell first discusses state and local government revenue sources, including various forms of taxes,
- Initially, very few controls were imposed on state debt financing, so several states financed transportation and commercial projects with their bonds in the early Nineteenth Century. In the wake of the economic panic of 1837, tax and project revenues declined, and several states defaulted or suspended payments on their obligations during the 1840s. Some states even repudiated portions of their debt. In response, debt ceilings (see IV I(1)-(3), below) and lending of credit limitations (see IV C(1)(b) and IV F(2), below) were later added to the constitutions of these states and of states that subsequently entered the Union.
- In addition to these economic effects, state and local government financial affairs have an important effect upon the quality of life experienced by Americans, because these governments provide many significant public services. Contractions in tax revenues and intergovernmental aid since the mid–1970s have resulted in pressures upon these governments in their attempts to maintain, from current revenues, the services demanded by their citizens. In addition, in recent decades, state and local governments have been called upon to borrow to finance economic development programs, low-and-moderate-income housing, pollution control facilities, and student loans, as well as traditional capital infrastructure products.
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Chapter III. State and Local Government Expenditure Patterns 23 results (showing 5 best matches)
- regular basis. For example, sales and use taxes, income tax withholdings and federal assistance payments usually are paid to the taxing government monthly or quarterly. Property taxes, on the other hand, typically are received only once per year. Because the time of payment usually is in the middle or toward the end of the fiscal year, a certain amount of financial juggling by governments that rely upon property taxes must take place to meet regular expenses incurred prior to the receipt of these property taxes.
- The advocates of state spending limits contend that the limits will restrict the capacity of government officials to expand their budgets in response to interest group pressures. As a result, they argue, spending limits will ultimately be more effective than either tax rate limits or levy limits (which generally apply only to real estate taxes, see II B(2), above) in lowering the overall level of taxes.
- In the wake of all the litigation and public controversy, many state legislatures have substantially modified the basic school financing system to redress the imbalances caused by heavy reliance on local property taxes for the funding of public schools. Alternative tax sources have been sought, with a state sales tax increment for education gaining favor in several states.
- As noted in II H–K, above, state and local governments receive a large percentage of their revenues from sources other than traditional taxes ( , grants from higher levels of government, charges for services, and income from proprietary activities). This expansion of non-tax revenue sources has raised the question whether state constitutional and statutory provisions that require “all revenue collected and money received” to go to a central depository and be spent only through legislative appropriations should be applied to non-tax revenues, as well as traditional tax revenues. In general, the answer to this question is “yes,” though courts have often gone to great lengths to sustain an expenditure that does not meet these requirements if other legislative support for the expenditure pattern can be found.
- Just as the powers to tax and to borrow may be used only for public purposes (see II A(2)(b), above, and IV C(1)(b) and IV F(2), below), state and local governments may spend money only for public purposes. The same basic tests used to review taxing
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Index 148 results (showing 5 best matches)
- See Sales and Consumption Taxes, Use Taxes
- See Sales and Consumption Taxes, Use Taxes
- See Real Property Taxes, Levy Limits; Real Property Taxes, Rates, Limitations Upon
- See Personal Property Taxes; Real Property Taxes, Proposition 2½
- See also, Sales and Consumption Taxes, General Sales Taxes
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Acknowledgements 2 results
Preface 2 results
- whether a particular tax or debt obligation is authorized; (2) federal and state constitutional limitations upon the exercise of taxing and borrowing powers; and (3) the rules for actually engaging in taxation, expenditures, or debt financing. Whenever possible, within the space constraints, the authors have attempted to place these rules and policies within their social and historical context.
- Public finance has taken on new significance in the past several decades. Serious fiscal crises in several major American cities, shifts in attitudes regarding state and federal social programs, and an explosion in the use of tax-exempt bonds have brought a topic once thought to be the exclusive province of public finance specialists to the attention of the American public at large. Law schools, in particular, have added courses on state and local taxation and finance to their curricula, and law students increasingly view municipal bond firms and state and local government agencies as respectable potential employers. Business schools and public policy schools have continued to give attention to the important topic of public finance.
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Outline 32 results (showing 5 best matches)
- Publication Date: July 13th, 2007
- ISBN: 9780314183873
- Subject: Taxation
- Series: Nutshells
- Type: Overviews
- Description: This guide is a fully updated summary of state and federal laws that pertain to public finance and taxation. It is a valuable supplement to law school courses on local government law and state and municipal finance, as well as course offerings on these topics in schools of business and public policy. The book places the technical legal rules it considers in the context of the broader public policy issues that those rules raise. It focuses on several past fiscal crises as a catalyst for, as well as a source of, doctrinal changes in these areas of the law.
