Newsletter Archive
November 29, 2006
The Tax Policy Center Newsletter
Yesim Yilmaz, Sonya Hoo, Matthew Nagowski, Kim Rueben, and Robert Tannenwald
States and their local governments vary both in their needs to provide basic public services, and in their abilities to raise revenues to pay for those services. This study uses the Representative Revenue System (RRS) and the Representative Expenditure System (RES) frameworks to quantify these disparities across states by comparing each state's revenue capacity, revenue effort, and necessary expenditures to the average capacity, effort, and need in the 50 states. A state's revenue capacity measures the resources its state and local governments can tap to finance public services, while a state's expenditure need gauges the extent to which its state and local governments face conditions that raise or lower the cost of and need for public services. Fiscal capacity assesses each state's ability to raise revenues relative to its expenditure needs.
Read the Complete Research Report
View the TPC Fiscal Disparities Page
Elaine Maag
Owing to balanced budget requirements, states often raise taxes during recessions. Unless carefully crafted, these tax hikes can fall on low-income working families--the same families likely to be subject to concurrent budget cuts. During the recession that started in 2001, states utilized several tools to balance budgets including tapping rainy day funds, borrowing, increasing taxes, and cutting spending. In many cases, low-income families were shielded from tax increases by increasing or creating state Earned Income Tax Credits (EITCs). This policy brief details state tax changes affecting low-income families between 2002 and 2006.
Read the Complete Policy Brief
Adam Carasso, Gillian Reynolds, and C. Eugene Steuerle
Before-tax profits of nonfinancial corporations surged to 7.8 percent of net national product in the second quarter of 2006. Noting this growth, various commentators have attempted to interpret and predict econoimc events ranging from the distribution of income in society to the prospects for the stock market. This column reexamines whether the after-corporate-tax returns to all corporate capital owners maintain the steadier share of net national product. We find that the income of corporate capital owners of nonfinancial corporations, net of tax, has remained much steadier than corporate profits, oscilating around 5.9 percent.
Read the Tax Fact Column
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