Is Local Discretionary Sales Tax Adopted to Counteract Fiscal Stress?

Kim, Dae-Jin; Bae, Sang Seok; Eger, Robert J.

doi:10.1177/0891242408327708

Cited by 18 publications

(23 citation statements)

References 41 publications

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“…When counties lack a competitive nature or the ability to compete, they lack the incentive to strive for effi ciency and fi scal health. A number of recent studies have demonstrated the competitive drive of local governments with the diff usion of policies (see Kim, Bae, and Eger 2009;McDonald and Gabrini 2014). As neighboring governments adopt policies that prove successful, local governments must either follow suit or face decline.…”

Section: A County Charter As Competitionmentioning

confidence: 99%

Does the Charter Form Improve the Fiscal Health of Counties?

McDonald

2015

Public Administration Review

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The public administration literature has paid attention to the relationship between the structure of a government and its ability to provide public services, reflected by its fiscal health. Although this literature has provided a useful understanding of government structures, it has largely ignored the charter form of government. As a formal written document that grants counties the power of self‐governance, a charter frees the county from state control. Included in this freedom is the ability to establish its own tax policies and services. In this article, the effects of charter adoption on fiscal health are tested using Florida county data from 1980 to 2012. The results show that the presence of a charter can improve the fiscal health of a county, which, in turn, can affect overall service provision.

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Section: A County Charter As Competitionmentioning

confidence: 99%

Does the Charter Form Improve the Fiscal Health of Counties?

McDonald

2015

Public Administration Review

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“…Where the effect of a surtax differs is in its indirect effects. As an additional tax, the implementation and revenue use of a surtax are carefully established (Kim, Bae, and Eger 2009). Levied funds have a predetermined purpose, often one that is redistributive in nature, and the tax burden is designed to target certain segments of the population.…”

Section: A Theory Of Surtaxesmentioning

confidence: 99%

“…The Tiebout hypothesis suggests that households will relocate to a jurisdiction where the set of goods, services and taxes matches their preferences (Tiebout 1956). A number of studies have shown the diffusion of government policies at the county level, including two that deal specifically with Florida (see Kim, Bae, and Eger 2009;McDonald and Gabrini 2014), have virtually no effect on household relocation. These studies suggest that households who move might receive a temporary benefit from reduced taxation, but the new jurisdiction is likely to adopt a tax similar to those of the household's previous residence.…”

Section: Notesmentioning

confidence: 99%

“…At the federal level, the United States has utilised surtaxes in a number ways, including to fund the Vietnam War by the Johnson administration (Poterba 1988) and as a tool for enforcing an income tax upon wealthy residents who would otherwise use deductions to reduce their tax burden (Mikesell 2014). At the local level, surtaxes are levied as a local option tax to fund particular services such as transit systems, local government infrastructure, education and indigent care programmes (Brunori 2007;Cherry 2012;Kim, Bae, and Eger 2009). Although the establishment of a tax is generally viewed as undesirable, the ability to target a surtax towards specific goods and populations and then link the revenue to particular services allows for a high degree of favourability amongst the population (Brunori 2007).…”

Section: Introductionmentioning

confidence: 99%

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Helpful local surtaxes? Florida and disadvantaged families

Miller

Eger

McDonald

2016

Local Government Studies

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Well-intended tax policy often produces unintended consequences. In this article, we look at one such tax policy, specialised surtaxes in the State of Florida. Surtaxes are frequently adopted to provide financial assistance to poverty-based local programmes and services. Despite the intended benefits, we show that the contributors of the tax have been able to capitalise the cost into the residential property market, ultimately placing the burden of the surtax upon the population its revenue intends to help.

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“…They find that with an additional dollar of earmarked taxes for highways, there is only a $0.19 increase in highway spending. 13 Kim, Bae, and Eger (2009) use per capita income as a measure for infrastructure demand and find that increases do not bring greater demand for an infrastructure tax. These findings suggest that earmarked revenue is spent in a manner reflective of the rational model and that tax earmarks are not distortionary.…”

Section: Rational Modelmentioning

confidence: 99%

Leviathan or Flypaper: Examining the Fungibility of Earmarked Local Sales Taxes for Transportation

Afonso¹

2015

Public Budgeting & Finance

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Analyses of the relationships of earmarked finances on their respective programs and total expenditures have produced conflicting views of how governments spend earmarked revenue. Some show that earmarks are used in addition to existing finances to increase the total level of funding for recipient programs while others show that earmarks are fungible and program spending is unchanged. An analysis on local option sales taxes earmarked for transportation (LOST-Ts) suggests that transportation spending is increased by more than LOST-T revenue. For every dollar generated by LOST-Ts, transportation spending increases by an estimated $1.76 and nontransportation spending decreases by an estimated $0.73. Transportation Excellence 2014). 1 Beyond the ramifications local option taxes may have on transportation, there is a broader question of how earmarked revenues affect the amount of program spending and whether its revenue is used to expand the size of government or just to increase the recipient program's budget.A wealth of literature describes the effects of earmarked intergovernmental or state revenues on state government spending. Less research has focused on the effects of earmarked local government own-source revenues. The analysis presented here examines California local option sales taxes earmarked for transportation, LOST-Ts. It tests whether the rational, Leviathan, or flypaper effect framework of spending best characterizes the use of this earmarked, own-source revenue. The answer to this question is critical because it sheds light on how effective these measures are for funding the recipient program.The findings support the flypaper effect; money sticks to the recipient program. On average, for every dollar of revenue generated by LOST-Ts, transportation spending increases by $1.76, and total expenditures minus transportation are estimated to decrease by $0.73. This suggests that LOST-T revenue is not treated as fungible by county governments and that transportation expenditures do not increase merely by the amount of LOST-T revenue generated, but by additional monies that would have otherwise been spent on other government functions.This paper begins with a discussion of LOST-Ts in California. Next is an overview of the literature on earmarks followed by a description of the three frameworks used in this analysis. Applicable theory and the estimation strategy and data are then addressed. The paper concludes with a discussion of the findings and implications and potential directions for future research. CALIFORNIA'S LOST-TSState and local governments are taking on more responsibilities due to the nationwide trend of devolved fiscal responsibility. In particular, local governments are becoming the owners of a growing inventory of roads and streets at a time when road maintenance costs are increasing dramatically and intergovernmental support is dwindling (Goldman and Wachs 2003). APPLICATIONS FOR PRACTICEThe revenue generated by local option sales taxes earmarked for transportation (LOST-Ts) is used as additio...

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Is Local Discretionary Sales Tax Adopted to Counteract Fiscal Stress?

Cited by 18 publications

References 41 publications

Does the Charter Form Improve the Fiscal Health of Counties?

Does the Charter Form Improve the Fiscal Health of Counties?

Helpful local surtaxes? Florida and disadvantaged families

Leviathan or Flypaper: Examining the Fungibility of Earmarked Local Sales Taxes for Transportation

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