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STATE INCOME TAX: A DOUBLE-EDGED SWORD

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Date Issued:
2011
Abstract/Description:
States are facing tough economic times as a result of the housing market bubble exploding. States have been declaring budget deficits and major program cuts, since revenues have not kept up with expenditures and rainy day funds have been practically exhausted. State tax revenues have decreased, resulting from a decline in income tax revenues, one of the major sources of revenues for a large number of states (41 in total). A majority of these states have come to depend heavily on the revenue they collect from income taxes, which can represent as much as 40% of state tax revenue. This thesis focuses on the impact that income tax revenue has on state budgets and how it affects certain expenditures. To provide a more complete understanding on how fiscal policy affects the citizen directly, this thesis compares the changes in state's total tax revenue and spending on education and health programs between states that levy income tax and states that do not. Data from the United States Census Bureau and the National Association of State Budget Officials was analyzed by calculating the growth rate and relevant elasticities during 2006-2010, the years before, during, and after the last recession. Results will show a difference in changes in revenue and expenditure between the two types of states and a more sensitive elasticity for non-income tax states for both revenue and expenditure. With a better understanding of how the tax base behaves and how revenue affects programs, an improved tax policy that could produce more efficient services for citizens might be created.
Title: STATE INCOME TAX: A DOUBLE-EDGED SWORD.
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Name(s): Burgos, Karla, Author
Pennington, Robert, Committee Chair
University of Central Florida, Degree Grantor
Type of Resource: text
Date Issued: 2011
Publisher: University of Central Florida
Language(s): English
Abstract/Description: States are facing tough economic times as a result of the housing market bubble exploding. States have been declaring budget deficits and major program cuts, since revenues have not kept up with expenditures and rainy day funds have been practically exhausted. State tax revenues have decreased, resulting from a decline in income tax revenues, one of the major sources of revenues for a large number of states (41 in total). A majority of these states have come to depend heavily on the revenue they collect from income taxes, which can represent as much as 40% of state tax revenue. This thesis focuses on the impact that income tax revenue has on state budgets and how it affects certain expenditures. To provide a more complete understanding on how fiscal policy affects the citizen directly, this thesis compares the changes in state's total tax revenue and spending on education and health programs between states that levy income tax and states that do not. Data from the United States Census Bureau and the National Association of State Budget Officials was analyzed by calculating the growth rate and relevant elasticities during 2006-2010, the years before, during, and after the last recession. Results will show a difference in changes in revenue and expenditure between the two types of states and a more sensitive elasticity for non-income tax states for both revenue and expenditure. With a better understanding of how the tax base behaves and how revenue affects programs, an improved tax policy that could produce more efficient services for citizens might be created.
Identifier: CFH0004107 (IID), ucf:44872 (fedora)
Note(s): 2011-12-01
B.A.
Business Administration, Dept. of Economics
Bachelors
This record was generated from author submitted information.
Subject(s): State Income Tax
Income Tax States
Non-Income Tax States
House Market Bubble
Tax Revenue
State Revenue
State Income Tax Revenue
Income Tax
Income Elasticity of Revenue
Health Expenditure
Education Expenditure
Medicaid Expenditure
State Expenditure
ARRA
Tax Policy
Persistent Link to This Record: http://purl.flvc.org/ucf/fd/CFH0004107
Restrictions on Access: public
Host Institution: UCF

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