“Where Do State and Local Government Get Their Tax Revenues” by Forster and Padgitt

The article “Where do State and Local Government Get Their Tax Revenues,” written by Forster and Padgitt, examines the main tax income sources for local and state governments in the US. The article provides a detailed analysis of each of these sources and their respective contributions to the overall revenue of state and local governments. Therefore, this essay will discuss the key takeaways from the article.

First of all, it is crucial to establish the exact origins and types of major taxes. Thus, there exist three main governmental revenue sources, which include sales taxes, property taxes, and personal income taxes (Forster & Padgitt, 2010). Approximately 75% of all tax revenue received by state and local governments comes from these sources (Forster & Padgitt, 2010). Second, with property taxes contributing roughly 72% of the local government’s total tax revenue, they are the main revenue source (Forster & Padgitt, 2010). According to the article, taxes on property are extremely regressive. Therefore, those taxes can often place an unjust burden on low-income families. This fact can put people with low earnings in challenging circumstances and make it difficult to address their basic needs. Thirdly, at about 23% of their total tax revenue, sales taxes rank as the second-largest source of tax revenue for state and local governments (Forster & Padgitt, 2010). According to Forster and Padgitt (2010), sales tax is retrograde as it encumbers low-income families more than high-income ones. Thus, the higher percentage in low-income cases impacts their potential to survive.

The article concludes by noting that in addition to corporate income taxes, excise taxes, and severance taxes, state and local governments collect taxes from several other sources. However, compared to the three primary sources of income previously mentioned, these sources typically make up a much smaller portion of total tax revenue. The article also emphasizes the significance of individual income, sales, and property taxes as these governments’ primary sources of tax revenue. Overall, it highlights the importance of tax revenue in supporting public services and initiatives, as well as the necessity for tax policy designers to consider low-income households’ tax burdens.

Reference

Forster, R. & Padgitt, K. (2010). Where do state and local governments get their tax revenue? Tax Foundation. Web.