Exam 3 Review and Study Guide - Political Science | POLS 207, Study notes of Local Government Studies

Download Exam 3 Review and Study Guide - Political Science | POLS 207 and more Study notes Local Government Studies in PDF only on Docsity! Unit 3 Review- Political Sciences Chapter 14  GDP-the sum of all the goods and services produces in the United States in a year ! Total government spending = 31% ! Federal spending = 20% ! State and local = 11%  Social services and Education are the most costly sources of state and local spending ! Social Services = State ! Education = Local  Public Safety, environment, and housing as well  Ways State and Local Governments gain revenue: ! Taxes are #1 ! Also federal grants, "user fees", Lotteries, and fines  Types of taxes: ! Progressive taxes : high-income groups pay larger percentage of their income than lower-income groups ! Regressive taxes : low-income groups pay larger percentage of income than high- income groups ! Proportional taxes : all income groups pay same percentage of their income in taxes ! Property Taxes : largest source of revenue for local governments. Regressive.  Burden depends on: 1. Ratio of assessed value of property to the fair market value 2. The rate at which assessed property is taxed (mills - tenths of a percent) 3. Tax exemptions and reductions for certain types of property ! Sales Taxes : largest source of revenue for state governments. Regressive? Maybe, but many states exclude "necessities of life" from taxation. Often considered "painless" taxation. ! Excise Taxes : "sin taxes". State revenue. Often earmarked for specific programs (e.g. cigarette tax to health care). Gas tax also excise tax. ! Income tax : State revenue. May be progressive (defended because of "ability to pay" of high-income groups) of flat. 16th Amendment = federal income tax. ! Corporate taxes : State revenue. Tax on income of corporations. May be flat or on a "sliding scale" based on profits.  Other Sources of revenue ! Lottery and Gambling : only ~2% ! User Charges : ~25%. Only people who use service pay fee  Types of Tax Limits: ! Property tax limits: limit allowable rates (e.g. to 10 or 15 mills), limit increases, allow reassessments only when property is sold ! Personal income limits: limit state taxes to a certain percentage of the state's total personal income ! State expenditure limits: limit spending to a certain percentage of a state's personal income ! Prohibitions on specific taxes ! Exemptions and special treatments  Explaining Tax Revolts: ! Self interest explanation: people who benefit from government spending should oppose tax limitation measures. People whose tax burdens are heaviest should support limitation measures. Only limited support for this explanation. ! High-Tax explanation: people who pay taxes should support limitations, while those who pay only a moderate burden should show little interest in a tax revolt. Little evidence. ! "Waste-in-Government" explanation: people who think government wastes money should support limitation proposals. Supported by surveys. ! Ideological explanation: conservatives support tax limits, liberals should oppose them. Some support. ! Fairness explanation: people who feel the system is unfair will support tax limits. ! Alienation explanation: tax revolt reflection of declining confidence in government.  Cutback Management: deciding how to reduce spending and services in order to relieve fiscal stress ! Problems  Resist cutting vs. smooth the deadline  Take a deep gouge vs. series of decrements  Share the pain vs. targeting the cuts  Promote efficiency vs. promote equity ! Cutback Strategies:  "No change strategy": across-the-board cuts, seniority retention, hiring freezes  Hierarchy of community needs strategy: set priorities  "Privatizing" Strategy  Reduction in capital spending strategy  Reduction in labor strategy  Capital financing: loans in the form of bonds sold to finance roads, schools, parks, libraries, prisons, government office buildings, water and sewage, hospital, etc. Even "private activites" like stadiums and convention centers. Pay back with interest. ! General Obligation Bonds: pledge "full faith and credit", including tax revenues, to repayment