Intro to Public Budgeting part 2 cards

types of Sales, excise, and property tax

General sales taxes

applies broadly to most goods and services

Retail Sales Tax

A single stage tax applied to the final sale of goods

General sales taxes

applies broadly to most goods and services

Retail Sales Tax

A single stage tax applied to the final sale of goods

Gross Receipt Tax

A tax on the total sales revenue of a business

Turn Over Tax

Tax applied at every stage of production of distribution so every time a good changes hand it’s taxed

value added tax (VAT)

each seller pays tax on their sales but the final customer bares the full cost. Added on value to raw material, manufacturing, etc.

Excise Tax

selective tax on specific good like alcohol or tobacco, used to discourage consumption

(based on # of units sold or the revenue generated)

Single Stage Tax

apply at the final sale to consumers

Multistage tax

apply at every stage of production but only on the value at each stage, preventing cascading (tax on tax)

Nominal Tax Rate

The rate written in the law

Effective tax rate

Actual tax paid relative to the product if differs from nominal if taxes accumulate at multiple stages

Sumptuary

reducing consumption of a good

benefit base

Based on benefit received by the tax payer to use more tax

Environmental

Target harmful effects on the environment, encourage greener choices

Statutory Incidence

Who is legally responsible for paying the tax, typically payroll shared by employer and employee

Remittance Incidence

Who’s responsible for collecting the tax and sending to gov’t

Original Principle

taxed where the good was purchased

Destination principle

taxed where the good is consumed

Ad Valorem Tax

Taxes that are levied based on the value of an item or property being bought or used. This tax is commonly applied to real estate, personal property, and imports, meaning the amount of tax owed increases with the value of the item.

General Fund taxes

Go towards broad gov’t budget

Earmarked Tax

Allocated for specific purposes such as fuel taxes are used for highway projects

What is Property Tax?

Tax on the market value of privately owned property like cars, land, building, inventory, etc

Usefulness of Property tax?

Local gov’t rely heavily on property tax, state rely much less.

70% local tax is property tax- schools financed from it

Cost Approach

Based on what it would cost to rebuild the property

Income Approach

For rental properties, its based on income generated

Sales Comparison

Based on recent sales of similar properties

Property Tax Rate

Quoted in mils 1 mil=1/10th of a percent or $1 for every 1000 of assessed value

What are user charges and fees?

alternative revenue sources that regulate activity like driving, marriage and hunting

Regulatory License

A regulatory license is a permit required to enforce compliance with specific laws and regulations applicable to certain industries or activities, such as alcohol sales, healthcare, and financial services.

Revenue License

Minimal oversight like marriage licenses

User Charge

Appropriate when goods and services benefit specific individuals and non payers ca be excluded. Ex. Water services

Helps prevent overconsumption and ensures that users cover the cost of services they directly benefit from

Exception of Property tax

Gov’t properties, religious buildings, educational charitable orgs, veterans, seniors and mortgage exceptions

Homestead Exception Law

Designate a parcel of real property to keep it off limits to certain creditors in case of economic problem

Luxury Tax

Enacted in 1993, 10% surcharge on luxury items like cars

Fiscal Monopoly

Revenue from gov’t run services like utilities, lotteries or state liquor stores

Charges

13.37% of state revenue. Largest source is state any other sources would be utility, liquor, hospital or highway tolls

Federal Charges

Postal fee, Medicare and other