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Public Finance: Overview

Public Finance: Overview. Some key questions: Responsibilities/functions Funding types/sources Revenues (income increasing net worth) Borrowing Key principles Allocation of responsibilities/functions/funding sources among governments Expenditures. Revenue Sources. Income tax Sales tax

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Public Finance: Overview

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  1. Public Finance: Overview • Some key questions: • Responsibilities/functions • Funding types/sources • Revenues (income increasing net worth) • Borrowing • Key principles • Allocation of responsibilities/functions/funding sources among governments • Expenditures

  2. Revenue Sources • Income tax • Sales tax • Property tax • Wealth transfer (land, estates, gifts) • Business/privilege (franchise) • Special assessments (local; earmarked?) • Fees • User charges • Other (lottery?)

  3. Borrowing • General obligation bonds (full faith and credit to be paid from taxes) • Revenue bonds (revenue stream dedicated) • More esoteric (tax increment financing/Amendment 1)

  4. Key principles • Ability to pay? • Benefit tied to payment? • Allocation of resources with responsibilities? • Efficiency in collection and disbursement? • Accountability? • Equalization for fundamental needs?

  5. Allocation Among Governments • Federal • income tax, gas tax, estate/gift tax; capital gains; luxury… • State: • income tax; corporate tax; intangibles (stocks/bonds) (shared); excise tax on beer/wine (shared); street aid (shared); franchise tax (public utilities) (shared); excise tax on conveyances (shared); sales (part); federal funds (Medicaid) (part: 70% fed, 20% state/equalized, 10% county); health (part); schools (part) • Local: • See above; property; portion of sales/use; privilege license; franchise; animal tax; 911 charges; occupancy taxes; land transfers; special assessments; user charges; ABC revenues; regulatory fees

  6. Constitutional Constraints: Federal • Due Process (Pittsburgh v. Alco Parking) • Due process generally: ends, means, arbitrary? • Any special cases? • Effect on substantive constitutional rights? • Exercise of forbidden power/taking? • Tax as mask for regulation? Single/small class? Poor fit? • Equal protection (Nordlinger) (Proposition XIII) • Acquisition value taxation • Equal protection basics: classification? Relationship to legitimate ends? Presumption of constitutionality?

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