POLS 207 1st Edition Lecture 8 Outline of Last Lecture I Tax Effort Vs Tax Burden II Taxes have shifted over the years III State Revenue and Expenditures IV State and Local Government Revenue Sources V State and Local Government Expenditures VI State Government Revenue from Own Sources VII State Government Revenue Overview VIII The Budget IX Tax Models Outline of Current Lecture I Taxes II Taxes Overview III Limitations on Texas State Taxing and Spending IV Equity V State and Local Borrowing Current Lecture I Taxes a Revenue Base Rate i Base assets income ii Rate percentage b Tax rate i Progressive 1 Larger percentage from high income individuals than low income ii Fixed or Flat 1 Same percentage from everyone c Tax Incidence i Division of a tax burden between buyers and sellers ii Including tax shifting iii Progressive 1 Reduced tax incidence on low income iv Neutral 1 Neither reduced on low income or high income v Regressive 1 Higher tax incidence on those who use services These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute II III d Income Tax i Base income subject to taxation ii Rate fixed or progressive iii Incidence fixed or progressive e Sales Tax i Base sales subject to taxation ii Rate fixed iii Incidence regressive f Property Tax i Base property subject to taxation ii Rate fixed iii Incidence regressive Taxes Overview Chart Property Tax Sales Tax Income Tax Base Being Taxed Wealth Consumption Income Primary User Local Government State Governments Federal Gov t Compliance Workload Government assesses property determines tax bills and collects taxes Retailer vendors report sales determine tax bills and collect taxes Taxpayers report income determine tax bills and submit taxes Tax Rate Flat Flat Progressive or Flat Tax Incidence Regressive Regressive Progressive Neutral or Regressive Income Predictability Highest Lowest Middle Visibility Visible to property owners Least visible Partly visible Age Cohort Tax Burden Older taxpayers Younger more than older Younger taxpayers Politics Preferred by nonpartisan local governments Preferred by Republicans as a use tax Preferred by Democrats as an ability to pay tax Limitations on Texas State Taxing and Spending a Pay as you go b Growth limits on some appropriations IV V c Welfare spending limit d Debt limit e Income tax prohibited Equity a Get what you pay for b Pay for what you get c Governments borrow money to achieve the goal of equity i Goods ii People iii Time State and Local Borrowing a Linked to capital goods b Separate capital budget c Reflected in operating budget TEST ON TUESDAY FEBRUARY 11TH