Figure 2.1 Personal Income and Personal Income Adjusted for the by s2939Sm

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									     Chapter 5:

Government Revenues and
      Expenditures
Table 5.1 Tax and Non-Tax Receipts as a Percentage of
           Gross Domestic Product by Year
                                1990 1995 2000 2005 2009
              Norway            55.5 54.2 57.7 57.3 56.8
              Denmark           54.6 56.2 55.5 57.4 53.9
              Sweden            63.1 58.0 60.7 55.9 53.4
              Finland           53.2 55.2 55.3 53.2 51.2
              France            47.0 48.9 50.1 50.5 48.9
              Belgium           45.5 47.5 49.1 49.3 48.7
              Netherlands       49.6 47.2 46.1 44.9 47.7
              Austria           48.9 50.2 49.6 48.1 47.4
              Iceland           38.3 39.8 43.6 47.1 45.9
              Italy             41.5 45.1 45.3 43.8 45.5
              Euro area         46.1 45.6 46.2 44.9 44.9
              Hungary                47.6 43.6 42.1 44.3
              New Zealand       48.7 44.9 41.2 45.0 44.2
              Germany           41.7 45.1 46.4 43.6 43.0
              Portugal          34.5 38.4 40.2 41.6 43.0
              United Kingdom    40.1 38.8 41.0 41.4 41.4
              Greece            30.9 36.7 43.0 37.8 40.5
              Luxembourg        42.1 42.1 43.7 41.7 40.5
              Spain             38.7 38.0 38.1 39.4 39.5
              Canada            43.0 43.2 44.1 40.8 39.1
              Czech Republic         40.5 37.9 41.0 38.5
              Poland                 43.3 38.1 39.0 38.2
              Ireland           40.1 39.1 36.3 35.4 35.4
              Korea             23.1 24.6 29.3 31.9 35.3
              Australia         33.7 34.5 36.1 36.3 34.6
              Slovak Republic        45.0 38.5 35.3 34.0
              Japan             34.0 31.4 31.4 31.7 33.9
              United States     32.8 33.8 35.8 33.1 33.4
              Switzerland       30.2 33.0 35.2 34.7 33.3
              Revenues and Expenditures

• 2007, taxes paid to all governments were 30% of personal income
$12,650
• 2007, government spent $15,200 per person
• Redistributing Income
         User or Client pay
         Ability to pay

Private Goods and Public Goods
Excludable
Non-rivaling
Merit good
       TAX INCIDENCE
• PROGRESSIVE
• NEUTRAL
• REGRESSIVE
        TAX INCIDENCE: NEUTRAL
          ALL PAY SAME PROPORTION
             OF INCOME IN TAXES
          HIGH


PCT.
INCOME
PAID IN
TAXES

          LOW                       HIGH
                    INCOME
   TAX INCIDENCE: PROGRESSIVE
       WEALTHY PAY HIGHER PROPORTION
                 OF INCOME IN TAXES
          HIGH


PCT.
INCOME
PAID IN
TAXES

          LOW                         HIGH
                       INCOME
       TAX INCIDENCE: REGRESSIVE
          POOR PAY HIGHER PROPORTION
                 OF INCOME IN TAXES
          HIGH


PCT.
INCOME
PAID IN
TAXES

          LOW                         HIGH
                       INCOME
                  Taxes
•   Property tax—flat-rate tax
•   Income tax
•   Sales tax
•   Severance tax
                              Taxes Overview
                      Property Tax               Sales Tax              Income Tax
Base Being Taxed           Wealth              Consumption                Income
 Primary User       Local Governments      State Governments      Federal Government
                   Government assesses Retailer vendors report       Taxpayers report
  Compliance       property, determines    sales, determine tax income, determine tax
   Workload        tax bills and collects bills and collect taxes bills and submit taxes
                            taxes
   Tax Rate                  Flat                   Flat            Progressive or Flat
 Tax Incidence          Regressive              Regressive         Progressive, Neutral
                                                                       or Regressive
    Income                Highest                 Lowest                  Middle
 Predictability
   Visibility       Visible to property        Least visible          Partly visible
                          owners
Age Cohort Tax       Older taxpayers       Younger more than       Younger taxpayers
   Burden                                        older
                       Preferred by           Preferred by            Preferred by
    Politics         nonpartisan local    Republicans as a “use     Democrats as an
                       governments                tax”             “ability to pay” tax
STATE GOVERNMENT REVENUE

 •   TAXES
 •   FEDERAL GRANTS
 •   FEES AND LICENSES
 •   INTEREST
 •   SALES
 •   BORROWING
 •   GAMBLING/LOTTERY
                                Texas Total Revenue
                                       Estimated 2010-11
                                     (Thousands of Dollars)
             Tax Collections                                   $78,988,126      47.1%

             Federal Income                                    $55,128,019      32.9%

             Licenses, Fees, Fines, and Penalties              $13,571,825       8.1%

             Interest and Investment Income                     $6,562,744       3.9%

             Lottery Proceeds                                   $3,073,751       1.8%

             Sales of Goods & Services                           $986,727        0.6%

             Settlements of Claims                              $1,017,683       0.6%

             Land Income                                        $1,740,459       1.0%

             Contributions to Employee Benefits                      $342        0.0%

             Other Revenue                                      $6,615,947       3.9%

             Total Net Revenue                                $167,685,623



Texas Comptroller of Public Accounts, Biennial Revenue Estimate 2010-2011, January 2009
               TEXAS TOTAL REVENUE
     Interest and
     investment income
                                State taxes
Licenses, fees,
fines, penalties




 Federal funds
                              Texas Tax Revenue
                                  Estimated 2010-11
                                (Thousands of dollars)
Sales Tax                                           $44,536,655   56.4%
Motor Vehicle Sales and Rental Taxes                 $5,570,865   7.1%
Motor Fuels Taxes                                    $6,332,110   8.0%
Franchise Tax                                        $8,880,706   11.2%
Insurance Taxes                                      $2,573,480   3.3%
Natural Gas Tax                                      $3,317,958   4.2%
Cigarette and Tobacco Taxes                          $2,876,368   3.6%
Alcoholic Beverage Taxes                             $1,615,874   2.0%
Oil Production and Regulation Taxes                  $1,221,992   1.5%
Inheritance Tax                                             $0    0.0%
Utility Taxes                                         $982,690    1.2%
Hotel Occupancy Tax                                   $746,638    0.9%
Other Taxes                                           $332,790    0.4%
Total Tax Collections                               $78,988,126
                TEXAS TAX REVENUE
               Tobacco
       Natural gas
      Insurance                    Sales tax



Franchise tax




     Motor fuels


                   Motor vehicle
                                                 Figure 5.1 Sales Tax and Income Tax

                                           50%              OR


                                                      r = -.60

                                                                                  MD
                                                                            MA
                                           40%                                        NY
                                                                 DE                                  CA
                                                                                                                KY
Percentage Dependence on Income Tax 2006




                                                                                                          NC
                                                                                                 OH
                                                                                                      MN
                                                                                           VA
                                                                                      CT
                                                                                                      ID             UT
                                                                                                               WV
                                                                       MT                   WI
                                           30%                                                             GA
                                                                                 NJ        PA      IN CO                                  HI AR
                                                                                             ME IA         MO                    AL
                                                                                              RI        OK
                                                                                                 NE  KS

                                                                 AK                             VT             SC
                                                                                                      MI
                                                                                                                          NM
                                                                                                                                AZ
                                                                                                          IL                         MS
                                           20%                                                                                                    LA

                                                                                                           ND

                                                                      NH



                                           10%

                                                                                                                                                       TN

                                                                                                                                 FL
                                                                                                                                              SD

                                                                                                 WY                        TX                          NV WA
                                           0%


                                                 0%                        20%                                      40%                                60%

                                                                  Percentage Dependence on Sales Tax 2006
Figure 5.2A State and Local Government Dependency
                  on Sales Tax 2006
          WA


                              MT         ND                                                                         ME

     OR
                                                    MN                                                    VT
                                                                                                               NH
                    ID
                                         SD                    WI                                   NY         MA
                               WY                                         MI                                  CT
                                                                                                                    RI

                                                     IA                                        PA
                                         NE                                                              NJ
               NV                                                                   OH             MD
                         UT                                         IL   IN                               DE
CA                                  CO                                                   WV
                                              KS          MO                                   VA
                                                                               KY

                                                                                              NC
                                                                         TN
                     AZ                        OK
                                   NM                     AR                              SC
                                                                                    GA
                                                                MS       AL


                                         TX               LA

          AK
                                                                                          FL
                                                          10 to 20 percent
                                                          20 to 30 percent
                              HI                          30 to 40 percent
                                                          40 to 50 percent
                                                          More than 50 percent
Figure 5.2B State and Local Government Dependency
                on Income Tax 2006
          WA


                              MT         ND                                                                         ME

     OR
                                                    MN                                                    VT
                                                                                                               NH
                    ID
                                         SD                    WI                                   NY         MA
                               WY                                         MI                                  CT
                                                                                                                    RI

                                                     IA                                        PA
                                         NE                                                              NJ
               NV                                                                   OH             MD
                         UT                                         IL   IN                               DE
CA                                  CO                                                   WV
                                              KS          MO                                   VA
                                                                               KY

                                                                                              NC
                                                                         TN
                     AZ                        OK
                                   NM                     AR                              SC
                                                                                    GA
                                                                MS       AL


                                         TX               LA

          AK
                                                                                          FL
                                                          Less than 10 percent
                                                          10 to 20 percent
                              HI
                                                          20 to 30 percent
                                                          30 to 40 percent
                                                          40 to 50 percent
Figure 5.2C State and Local Government Dependency
              on the Property Tax 2006
          WA


                              MT         ND                                                                         ME

     OR
                                                    MN                                                    VT
                                                                                                               NH
                    ID
                                         SD                    WI                                   NY         MA
                               WY                                         MI                                  CT
                                                                                                                    RI

                                                     IA                                        PA
                                         NE                                                              NJ
               NV                                                                   OH             MD
                         UT                                         IL   IN                               DE
CA                                  CO                                                   WV
                                              KS          MO                                   VA
                                                                               KY

                                                                                              NC
                                                                         TN
                     AZ                        OK
                                   NM                     AR                              SC
                                                                                    GA
                                                                MS       AL


                                         TX               LA

          AK
                                                                                          FL
                                                          10 to 20 percent
                              HI
                                                          20 to 30 percent
                                                          30 to 35 percent
                                                          35 to 40 percent
                                                          More than 40 percent
Figure 5.3A Regressivity of State and Local Taxes 1995

                                                   20%
   Percentage Tax Paid By Highest 1% Income 1995




                                                   15%



                                                                                                                                             NY

                                                                                                                   CA
                                                                                                             MN             RI

                                                   10%
                                                              Progressive Taxes                        VT
                                                                                                                  ME
                                                                                                             OR
                                                                                                                                       NM
                                                                                                   ID NC MD HI            WI                NJ
                                                                                                       KY   KS     IA
                                                                                             SC               UT AR
                                                                                  DE                   WV
                                                                                                  VA      GA
                                                                                            MT               AZ MS MI PA
                                                                                                    OK    ND
                                                                                                            MOCT    IN
                                                                                                      CO
                                                                                                                      LA IL
                                                   5%                                                             AL
                                                                                                                                 TX
                                                                                                  NH                                              WA
                                                                                                                       TN        FL
                                                                                             WY                   SD
                                                                                       AK
                                                                                                                                 Regressive Taxes
                                                                                                  NV




                                                   0%


                                                         0%               5%                           10%                            15%              20%

                                                                    Percentage Tax Paid By Lowest 20% Income 1995
Figure 5.3B Regressivity of State and Local Taxes 2002

                                                   20%
   Percentage Tax Paid By Highest 1% Income 2002




                                                   15%




                                                   10%        Progressive Taxes


                                                                                                    VT NE OH CA   NY
                                                                                             WV
                                                                                               ME       NM
                                                                                                    MN      NJ RI
                                                                                               IDNC
                                                                                        SC           UT KS
                                                                                  MT        KY MS AR       OKHI MI
                                                   5%                       DE          VA              GA
                                                                                               MD ND LA
                                                                                           MA CT IA      IN AZ IL
                                                                                                       PA
                                                                                              CO                                   WA
                                                                                                     TX TN               FL
                                                                       AK
                                                                                                           AL
                                                                                        NH            SD

                                                                                       WY NV
                                                                                                                       Regressive Taxes

                                                   0%


                                                         0%                 5%                      10%                  15%              20%

                                                                    Percentage Tax Paid By Lowest 20% Income 2002
Figure 5.3B Regressivity of State and Local Taxes 2007

                                                   20%
   Percentage Tax Paid by Highest 1% Income 2007




                                                   15%




                                                   10%

                                                              Progressive Taxes
                                                                                                        CA
                                                                                               VT NC       NJ
                                                                                                     NY
                                                                                               MN
                                                                                                     MEWV      OH HI
                                                                                              ID WI
                                                                                                       MD NE
                                                                                         SC   OR KS KY MS IA GA
                                                                                                                     AR
                                                                                                  MI           RI IN
                                                   5%                                          VA   MOMALA           AZ
                                                                               DE                           NM
                                                                                                 UT OK           CT
                                                                                    MT                  AL    PA        IL
                                                                                                CO
                                                                                                     ND         TN TX
                                                                                                                                        WA
                                                                                         AK   NH                             FL
                                                                                                              SD
                                                                                                   NV
                                                                                               WY
                                                                                                                             Regressive Taxes
                                                   0%


                                                         0%               5%                            10%                       15%           20%

                                                                     Percentage Tax Paid by Lowest 20% Income 2007
Figure 5.5A Regressivity of State and Local Taxes 1995
           WA


                               MT         ND                                                                         ME

      OR
                                                     MN                                                    VT
                                                                                                                NH
                     ID
                                          SD                    WI                                   NY         MA
                                WY                                         MI                                  CT
                                                                                                                     RI

                                                      IA                                        PA
                                          NE                                                              NJ
                NV                                                                   OH             MD
                          UT                                         IL   IN                               DE
 CA                                  CO                                                   WV
                                               KS          MO                                   VA
                                                                                KY

                                                                                               NC
                                                                          TN
                      AZ                        OK
                                    NM                     AR                              SC
                                                                                     GA
                                                                 MS       AL


                                          TX               LA

           AK
                                                                                           FL
                                                           Progressive
                               HI
                                                           0 to 3 percent
                                                           3 to 6 percent
                                                           6 to 9 percent
                                                           More than 9 percent
Figure 5.5B Regressivity of State and Local Taxes 2002
           WA


                               MT         ND                                                                          ME

      OR
                                                     MN                                                     VT
                                                                                                                 NH
                     ID
                                          SD                     WI                                   NY         MA
                                WY                                          MI                                  CT
                                                                                                                      RI

                                                      IA                                         PA
                                          NE                                                               NJ
                NV                                                                    OH             MD
                          UT                                          IL   IN                               DE
 CA                                  CO                                                    WV
                                               KS          MO                                    VA
                                                                                 KY

                                                                                                NC
                                                                           TN
                      AZ                        OK
                                    NM                     AR                               SC
                                                                                      GA
                                                                   MS      AL


                                          TX               LA

           AK
                                                                                            FL
                                                                Progressive
                                                                0 to 3 percent
                               HI                               3 to 6 percent
                                                                6 to 9 percent
                                                                More than 9 percemt
Figure 5.6 Personal Income and State and Local Taxes

                                          $10,000
                                                                                                                                    WY




                                           $9,000
                                                                                                                                         NY
  State and Local Taxes Per Capita 2006




                                                                        r = .68
                                           $8,000




                                                                                                                                                        NJ
                                                                                                                               DE                              CT
                                           $7,000
                                                                                                              HI                                    MA
                                                                                                                               CA

                                                                                                                          MN
                                                                                          IN         VT                                       MD
                                                                                                                RI
                                           $6,000                         NM         ME              NE
                                                                                                                               VA
                                                                                          ND                   NV    WA
                                                                                                         WI               IL
                                                                                  LA           OH                              CO
                                                                                                    OR
                                                                                                          KS FL PA
                                                                        UT SC             IA
                                                                                                    MI
                                                                                MT     NC                                      NH
                                           $5,000                  WV                                TX
                                                                          ID
                                                                                          OK
                                                                   AR           AL GA      MO
                                                              MS          KY                        SD
                                                                                     AZ TN


                                           $4,000


                                                    $25,000              $30,000                    $35,000                    $40,000        $45,000        $50,000

                                                                                               Per Capita Income 2006
  Figure 5.8A Local Government Revenue 2006

                                      Sales
                                       Tax

Insurance Trust     Utility Revenue
   Revenue




                                                   Intergovernmental Revenue



              Charges and
              Miscellaneous




                                                                            Individual
                                              Property Tax                Income Tax


        Other Tax
   Figure 5.8B State Government Revenue 2006
                                      Other
                                       Tax




                         Individual
 Corporate             Income Tax
Income Tax                                    Intergovernmental Revenue
                    17%
                                                         24%
                                                                          Property
                                                                            Tax
                Charges and
                Miscellaneous


                                                     Insurance Trust
                                                        Revenue



                                 Sales Tax
Motor Vehicle
 Licenses                                                21%

                                  19%

                                                     Utility Revenue
Figure 5.9A Local Government Expenditures 2006
                    Insurance Trust




Miscellaneous               Utilities



                                                    39%
         Interest
                                                     Education
         On Debt


          Government
         Administration



            Environment &
              Housing




                    Public Safety
                                           Social Services
                                             & Income
                                            Maintenance



                          Transportation
Figure 5.9B State Government Expenditures 2006


                                  16%
                              Insurance Trust
                                                18%
  Liquor Stores

     Utilities                                  Education




              Miscellaneous

           Interest
           On Debt

            Government
           Administration                              36%

                                                Social Services
Environment                                       & Income
 & Housing                                       Maintenance
                  Public Safety



                                   8%
                         Transportation
Figure 5.10A Trends in State Expenditures
            Millions of Dollars
                California
Figure 5.10B Trends in State Expenditures
            Millions of Dollars
                 Alabama
Figure 5.10C Trends in State Expenditures
            Millions of Dollars
                  Texas

								
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