1. Taxes & Government Spending
Chapter 14 Section 4
State & Local Taxes and Spending

2. Taxes & Government Spending
Objectives:
Explain how states use a budget to plan their spending.
Identify where state taxes are spent.
List the major sources of state tax revenue.
Describe local government spending and sources of revenue.

3. Taxes & Government Spending
Why are Private Colleges/Universities more expensive than State Colleges/Universities?
The Federal Government gives money to the State who in turn give some money to each college and university to run their school and it costs the students less money.

4. Taxes & Government Spending
State Budgets
Governments spend time planning their spending ahead of time, like businesses and individuals do.
Operating Budget – pays for day-to-day expenses.
They include salaries, supplies like paper and computers, and maintenance of state facilities

5. Taxes & Government Spending
Capital Budget – pays for major capital, or investment, spending.
Most of these expenses are long-term – from sale of bonds.
Balanced Budgets - budgets in which revenues are equal to expenses (spending)
State & Local Governments must have a balanced budget each year. Congress do not have to follow this rule.

6. Taxes & Government Spending
Where are Taxes Spent?
Some of the most obvious ones include…
Education – financial help to these institutions of higher learning. They also provide money for primary and secondary schools.
Public Safety – Police force to enforce the laws that are passed by the legislature.
Highways & Transportation – building and maintaining a highway system.

7. Taxes & Government Spending
4. Public Welfare – States look after the health and welfare of the public. Hospitals, clinics, and etc.
5. Arts & Recreation – state forest, picnic areas of state parks.
6. Administration – Court system, Legislature, people who work in these places, and etc.

8. Taxes & Government Spending
State Tax Returns
For every dollar a state spends, they must take in a dollar in revenue.
Most of the money comes from Sales Tax and State Income Tax

9. Taxes & Government Spending
Limits on State Taxation
The US Constitution puts limits on the states and their power to tax.
Trade is considered to be a national enterprise, states are not allowed to tax imports or exports.
The states cannot tax goods sent between states.
The states cannot tax federal property

10. Taxes & Government Spending
Non-profit organizations, religious groups, and charities are usually tax exempt – they are not subject to taxes.
Sales Tax is the main form of revenue for the states.
Sales taxes range from 3% to 8 ½% in the country.

11. Taxes & Government Spending
Some states have state income taxes
Texas does not!
Some state have a flat state income tax, others have progressive tax.
Most states collect corporate income taxes from companies that do business in the state.

12. Taxes & Government Spending
Other State Taxes
- Licensing fee to do business in the state
- Transfer fee when documents such as stock certificates are transferred and recorded.
- Severance Tax on companies that take resources from the ground i.e. natural gas
- Property Tax on all tangible items such as land, house, jewelry, and etc.

13. Taxes & Government Spending
Local Government Spending & Revenue
Include towns, cities, counties, townships, parishes, districts, and etc.
They carry a major responsibility in areas like…
Public School * Law Enforcement
Fire Protection * Facilities (Public)
Parks & Rec Centers * Public Transportation

14. Taxes & Government Spending
These local units also collect property taxes