Are State and Local Revenue Systems Becoming Obsolete?
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.
Volume (Year): 55 (2002)
Issue (Month): 3 (September)
|Contact details of provider:|| Postal: 529 14th Street NW Suite 750, Washington DC 20045|
Web page: https://www.ntanet.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
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: (A. Sinan Unur)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.