Sources of Revenue (Chapter 5)  <ul><li>Beth Bader Lori Roe  Aleta Thompson </li></ul>Financing Education in a Climate of ...
School Finance - like a coin Two sides: <ul><li>1.Revenue distribution </li></ul><ul><li>2. Revenue raising </li></ul>
Education - Financed by Government <ul><li> tax base (taxable value of items taxed) </li></ul><ul><li>tax rate  (price ap...
Agree or Disagree <ul><li>taxes paid according to a person’s financial capacity or ability </li></ul><ul><li>taxes based o...
Characteristics of a Good Tax System <ul><li>Good tax system is necessary </li></ul><ul><li>Important qualities of a good ...
Property Taxes <ul><ul><li>Was the first kind of tax to pay for education </li></ul></ul><ul><ul><li>Still constitutes the...
Criteria for Evaluating Tax Structures <ul><li>Efficiency- the structure of fiscal administration- best operated when ther...
Other Education Funding Sources <ul><li>Income tax--progressive tax levied on yearly income; basic of the federal financia...
Lottery-  “ a wonderful thing - taxation only on the willing”  <ul><li>History: </li></ul><ul><li>A system to raise state ...
DE Lottery <ul><li>The Delaware Lottery contributes its profits to the State General Fund. Since 1975, more than $3.3 bill...
Potential New Taxes <ul><li>E-Commerce and Internet Sales </li></ul><ul><li>“ Senate Bill 150  Internet TAx Non-Discrimina...
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  • Since the public sector needs financial resources to operate and provide services for society, some system needs to be in place to support this funding.
  • The most successful system for getting funds from the profit-making sector to public institutions is taxation. It provides for an orderly transfer of private monies to public purposes. Fairer than tuition, rate bills, student fees.
  • Whether we agree or disagree, all citizens owe taxes. There are varying degrees. Because everyone pays taxes, ideally a good tax system creates equity among its citizens. Aleta will address the characteristics of a good tax system. Two principals - benefits received and/or ability to pay... Key question is “how” to determine a person’s economic well-being or “ability” to pay.
  • States assuming responsibility for financing education. Federal government passed legislation - Goods sold over internet are exempt from tax. NY, Rhode Island, NC have new laws requiring state sales tax on in-state websites. Feds claim an excise tax on “telecommunciation services” and some states on internet providers. Big debate on this... p.137
  • Class preso

    1. 1. Sources of Revenue (Chapter 5)  <ul><li>Beth Bader Lori Roe  Aleta Thompson </li></ul>Financing Education in a Climate of Change
    2. 2. School Finance - like a coin Two sides: <ul><li>1.Revenue distribution </li></ul><ul><li>2. Revenue raising </li></ul>
    3. 3. Education - Financed by Government <ul><li> tax base (taxable value of items taxed) </li></ul><ul><li>tax rate (price applied to tax base) </li></ul><ul><li> tax yield (levy or amount of revenue raised from the tax.) </li></ul><ul><li>  </li></ul>The tax system - function of 3 variables Tax Base X Tax Rate = Tax Yield
    4. 4. Agree or Disagree <ul><li>taxes paid according to a person’s financial capacity or ability </li></ul><ul><li>taxes based on wealth </li></ul><ul><li>taxes based on property owned </li></ul><ul><li>taxes based on consumption (goods purchased) </li></ul><ul><li>taxes based income </li></ul>“ Using income as a measure of fiscal capacity creates a fair system of tax burdens on society. ” p. 114
    5. 5. Characteristics of a Good Tax System <ul><li>Good tax system is necessary </li></ul><ul><li>Important qualities of a good system:  </li></ul><ul><li>All citizens owe/pay </li></ul><ul><li>tax systems coordinated </li></ul><ul><li>Convenient--direct rather than hidden, easy to pay </li></ul><ul><li>Collection and administrative costs low </li></ul><ul><li>Taxes/services visible </li></ul><ul><li>Few earmarks, little restrictions </li></ul>
    6. 6. Property Taxes <ul><ul><li>Was the first kind of tax to pay for education </li></ul></ul><ul><ul><li>Still constitutes the majority of the local tax revenues for schools </li></ul></ul><ul><ul><li>Tax rates--usually expressed in mills per dollar of assessed value or dollars per 100 dollars of assessed value </li></ul></ul><ul><li>Negatives:   </li></ul><ul><ul><li>often the rates are set and controlled locally by leaders &quot;not particularly well qualified&quot; </li></ul></ul><ul><ul><li>difficult to keep assessments fair and equitable </li></ul></ul><ul><ul><li>difficult to determine &quot;relative worth&quot; of different types of property that don't compare easily </li></ul></ul>
    7. 7. Criteria for Evaluating Tax Structures <ul><li>Efficiency- the structure of fiscal administration- best operated when there is the least economic/social costs but highest order of services </li></ul><ul><li>Equity- Provides the highest degree of fairness in treatment of individual citizens </li></ul><ul><li>Adequacy- The system should provide enough funds to support the level of public service for the adopted government agency </li></ul><ul><li>Adaptablity- any system provides for administration of a program of school finance that: </li></ul><ul><li>1) adapts to changing economic conditions </li></ul><ul><li>2) adapts to modified social demands for education </li></ul><ul><li>3)Adapts to significant changes in education </li></ul>
    8. 8. Other Education Funding Sources <ul><li>Income tax--progressive tax levied on yearly income; basic of the federal financial structure; on personal and corporate incomes </li></ul><ul><li>Sales tax--taxes levied on sale value of certain goods and services </li></ul><ul><li>Sumptuary tax--a &quot;vice tax on commodities the government deems not in the &quot;public interest&quot; </li></ul><ul><li>Severance tax--&quot;taxes imposed distinctively on removal of natural products-- e.g., oil, gas, . . . timber, fish, etc.--from land or water and measured by value or quantity of products removed or sold&quot; </li></ul><ul><li>Private foundations--businesses, charitable organizations/foundations </li></ul><ul><li>School-business partnerships (ie, local businesses sponsoring classrooms) </li></ul><ul><li>Lotteries--over 40 states use lotteries to raise revenue </li></ul>
    9. 9. Lottery- “ a wonderful thing - taxation only on the willing” <ul><li>History: </li></ul><ul><li>A system to raise state funds in New Hampshire 1964. </li></ul><ul><li>Were used to support colonial soldiers and to build Harvard, Princeton, Yale, Dartmouth, Columbia, and William and Mary </li></ul>
    10. 10. DE Lottery <ul><li>The Delaware Lottery contributes its profits to the State General Fund. Since 1975, more than $3.3 billion has been transferred to the General Fund from Lottery proceeds. In fiscal year 2009, the Lottery's contribution was $248 million, making it the state's fourth-largest revenue generator. </li></ul><ul><li>The General Fund is the pool of dollars that finances the majority of state services in Delaware, including: </li></ul><ul><li>Public and higher education </li></ul><ul><li>Health and social services </li></ul><ul><li>Public safety </li></ul><ul><li>Judicial and corrections </li></ul><ul><li>Child, youth and family services </li></ul><ul><li>Natural resources and environmental control </li></ul><ul><li>As required by law, 30% or more of all Lottery ticket revenue is contributed to the General Fund to help pay for state services. </li></ul>
    11. 11. Potential New Taxes <ul><li>E-Commerce and Internet Sales </li></ul><ul><li>“ Senate Bill 150 Internet TAx Non-Discrimination Act of 2003 bans Internet taxes and electronic commerce imposed by Internet Tax Freedom Act.” </li></ul>
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