This document discusses key concepts related to government spending and taxation in the United States. It defines Gross Domestic Product (GDP) as the total value of goods and services produced, and notes that 34% of all government spending is funded through GDP. It also defines Gross State Product (GSP) and Gross Regional Product (GRP) as measures of economic output for states and regions. The document outlines various taxes levied by federal, state, and local governments, including income, sales, property, corporate and excise taxes. It also discusses principles of taxation such as equity, yield, elasticity, political accountability, and acceptability.

1. PO 202
Spring 2017

4. GROSS DOMESTIC PRODUCT
(GDP)
 Total value of goods and
services produced in U.S.
 Measure of national
economy
 34% of all govt. spending
 State and local
governments spend
additional monies
GROSS STATE PRODUCT (GSP)
GROSS REGIONAL PRODUCT (GRP)
 Sum of all value added by
state-based industries
 Measure of state economy
 Money toward education,
social services, public
safety, transportation

8.  State and local governments benefit from
intergovernmental transfers.
 Local governments rely heavily on states and
federal govt. for financial assistance.
 State and local financial relations are closely
tied to national government.

9.  Importance of Diversity
 Levels of Government andTheirTaxes
 IncomeTax (National Government)
 SalesTax (State Government)
 PropertyTax (Local Government)
 What is a tax burden?
 Taxes as percent of person’s income

11.  SalesTaxes
 Greatest source of revenue for state governments
 Decline due to Internet and service-oriented economy
 ExciseTaxes
 Examples: Cigarettes and Alcohol
 PropertyTaxes
 Bulk of local government revenue (75%)
 Creates disparity between richer and poorer areas

13.  IncomeTaxes
 21.5% of all state and local revenue
 Graduated income tax (progressive) or flat tax
 CorporateTaxes
 Tax on corporate net profits
 SeveranceTaxes
 Tax on natural resources in some states
▪ Minerals, natural gas, coal
 AK: Oil and gas taxes make up 50% of state revenue
 Popular with those with ample resources

14.  EstateTax
 Taxes levied on person’s estate or holdings after death
 GiftTax
 Taxes improved on money transfers during lifetime
 “Pole”Taxes
 Taxes imposed on escort services in Utah
 JockTax
 Pro athletes file and pay tax on games played in areas

16.  #1: Equity
 Taxes should be fair for all citizens
 Progressive, Regressive, and Proportional / FlatTaxes
 #2: Yield
 Evaluated on efficiency
▪ Contributions vs. Efforts of Administration and Collection
 Depends on the tax base and tax rate
 #3: Elasticity
 Responsive to economy
 Revenues should keep pace with tax increases.
 Tax reductions should equate with economic recessions and income
▪ Impact on Citizens’ Tax Rates

17.  #4: Political Accountability
 Citizens should know how much they owe and
when it must be paid, etc.
 #5: Acceptability
 Taxes congruent with citizen preferences.
 Large payments (property taxes) inflict more pain
than smaller, frequently paid sums (sales taxes).