IDEAS home Printed from https://ideas.repec.org/a/ntj/journl/v55y2002i3p467-89.html
   My bibliography  Save this article

Are State and Local Revenue Systems Becoming Obsolete?

Author

Listed:
  • Tannenwald, Robert

Abstract

In recent months, we public finance types have become used to nearly universal reports of sharply declining state revenues. Although cyclical factors are mostly responsible, many tax analysts believe that long-term economic and technological developments are also partially to blame and will continue to constrain state and local revenue growth well into the foreseeable future. As a result of these developments, state and local revenue systems are becoming increasingly "out of sync" with the economy’s changing structure. The economic stocks and flows that they are designed to "meter" comprise a shrinking fraction of the nation’s wealth and economic activity. According to some, these factors are so pervasive and persistent that they threaten to make current state and local tax systems obsolete. This paper discusses the impact on state and local revenues of four such factors: 1) the shift in the nation’s mix of production and consumption from goods to services, 2) the growing importance of intangible assets in generating output, 3) the proliferation of electronic commerce; and 4) the intensification of interjurisdictional competition. While I provide evidence that all four factors threaten the revenue productivity of state and local taxes, I have no good solutions to offer. Numerous plans to modernize state and local revenues systems have been suggested, but most would sacrifice important tax policy goals. No solution presents state and local policymakers with a clear win-win situation, in which they could halt or reverse the decline in the revenue productivity of their taxes without sacrificing autonomy, competitiveness, neutrality, or administrative simplicity.

Suggested Citation

  • Tannenwald, Robert, 2002. "Are State and Local Revenue Systems Becoming Obsolete?," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(3), pages 467-489, September.
  • Handle: RePEc:ntj:journl:v:55:y:2002:i:3:p:467-89
    as

    Download full text from publisher

    File URL: https://www.ntanet.org/NTJ/55/3/ntj-v55n03p467-89-are-state-local-revenue.pdf
    Download Restriction: Access to most recent volumes (current and past two years) is restricted to subscribers and members of the National Tax Association.

    File URL: https://www.ntanet.org/NTJ/55/3/ntj-v55n03p467-89-are-state-local-revenue.html
    Download Restriction: Access to most recent volumes (current and past two years) is restricted to subscribers and members of the National Tax Association.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bruce, Donald & Fox, William F., 2000. "E-Commerce in the Context of Declining State Sales Tax Bases," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 1373-90, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luca Gandullia, 2012. "The role of direct taxes in fiscal decentralization," DEP - series of economic working papers 6/2012, University of Genoa, Research Doctorate in Public Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:55:y:2002:i:3:p:467-89. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sally Sztrecska). General contact details of provider: https://www.ntanet.org/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.