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Can state and local governments rely on alternative tax sources?

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  • William F. Fox

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.

Suggested Citation

  • William F. Fox, 2010. "Can state and local governments rely on alternative tax sources?," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Oct, pages 88-101.
    • Handle: RePEc:fip:fedlrd:y:2010:i:oct:p:88-101:n:v.6no.1
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    1. Di Bella, Enrico & Gandullia, Luca & Leporatti, Lucia, 2015. "The Impact of Gambling on Government Budget: A European Comparison with a Focus on Italy - L’impatto del gioco d’azzardo sul bilancio dello stato: un confronto europeo e analisi del contesto italiano," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 68(2), pages 187-212.
    2. di Bella, Enrico & Gandullia, Luca & Leporatti, Lucia, 2014. "Short and long run income elasticity of gambling tax bases: evidence from Italy," MPRA Paper 73757, University Library of Munich, Germany.

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    Local finance; state finances;

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