Chapter 12: Financing State Government
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political values
a set of beliefs about political processes and the role that government should play in our society
public goods
goods or services characterized by the features of nonexcludability and nonrivalrous consumption; they are often provided by governments
nonexcludability
the inability to practically prevent people from receiving or enjoying a good or service due to nonpayment
nonrivalrous consumption
situation in which the use or enjoyment of a good service by a person or persons does not diminish the availability of that good or service for others to use or enjoy
collective benefit
goods that are provided with no charge because there is a broader public benefit associated with the good
re-distributive goods
those goods where government takes money from one group of citizens and gives it to other citizens; welfare is a good example
regulatory goods
good, activity, or resource that the government regulates to prevent overuse; an example is pumping water from a commonly owned aquifer
tax capacity
a measure of the wealth of a state or its ability to raise revenues relative to all other states
tax effort
a measure of how close a state comes to using its tax capacity
per capita tax
the total taxes raised in a state divided by the number of residents
tax exporting
the shifting of taxes to citizens in other states; a good example is Wyoming coal, which is exported to Texas to generate electricity
consumer taxes
taxes that citizens pay when they buy goods and services; sales taxes
benefit-based taxes
taxes for which there is a relationship between the amount paid in taxes and services received; motor fuel taxes are a good example
ability to pay
taxes that are not based on the benefit received but the wealth, or ability to pay, of an individual
regressive taxes
taxes that take a higher percentage of income from low-income persons
progressive taxes
taxes that take a higher of income from high-income persons
proportional taxes
taxes that take same percentage of income from all citizens
tax base
the items that are subject to tax; for example, the items subject to sales tax
tax shifting
passing taxes on to other citizens
tax incidence
the person actually paying the tax
nontax revenue
governmental revenue derived from service charged. fees (tuition), lottery, and other sources
earmarked revenue
tax revenue set aside for specific purposes; in Texas about 80 percent of revenue is earmarked
discretionary funding
those funds in the state budget that are not earmarked for specific purposes
income-elastic taxes
taxes that rise and fall quickly relative to changes in economic conditions; the Texas tax system is very income-elastic