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Discussion 1: Tax Preferences

A significant complexity in the tax code is caused by tax preferences-the "exclusions, exemptions, and deductions from the tax base" (Hyman, 2014, p. 506). Tax preferences are ways that policy makers can support or discourage certain behaviors by allowing taxpayers to deduct specific expenditures from the income on which they pay taxes. Tax expenditures reduce the amount of tax that the government collects. In effect, they provide a subsidy for economic activities. For this Discussion, consider the last tax return or form you are familiar with. What expenditures are/are not available to you? What effect would these have on your annual taxes?

Post by Day 3 an explanation of tax preferences and their purpose. Your explanation should include the following:

. At least three examples of tax preferences based on material in the Hyman (2014) course text
. An analysis of arguments for and against each identified tax preference, including supportive examples and evidence

Be sure to support your post with specific references to the Learning Resources and other peer-reviewed sources and provide full APA-formatted citations for your references.

Read your colleagues'' postings.

Respond by Day 5 to at least two of your colleagues'' postings in one or more of the following ways:

. Ask a question about the argument your colleague made in supporting a tax preference.

. Make a conclusion about price distortions caused by the tax preference example offered by a colleague.

. Expand on an example or evidence that your colleague offered in analyzing arguments for and against a specific tax preference.
Return to the Discussion in a few days to read the responses to your initial post. Note any insights you gained as a result of the comments your colleagues made.

Discussion 2: Financing State Roads and Bridges

States rely primarily on four major taxes to support their activities: personal income tax, sales tax, property taxes, and corporate income taxes. A balance between these four sources and a diversified structure is considered ideal. Each of these taxes reaches different types of wealth and has different degrees of variability. Also, it is important to note that not every state imposes each of these four major taxes, and changes in state tax structures can be quite frequent. This is usually the result of shifts in philosophies of taxing and spending, reflecting shifts in political leadership. In California, for example, a proposal to increase the motor vehicle registration tax by 300% hastened a successful effort to recall the governor (Marinucci & Garofoli, 2013).

Consider the following scenario: A state legislature is debating how to finance needed upgrades to roadways and bridges. Among the possibilities: increased motor vehicle registration fees, a personal property tax on motor vehicles, a tax on automobile parts in addition to an already existing sales tax, a tax on vehicle miles traveled (payable at the gas pump or by billing based on an in-vehicle GPS system that records miles traveled), and higher taxes on cigarettes and liquor.

Post by Day 3 an assessment of two of the four proposed options and the impact of each if it is chosen by the state legislature. Your assessment should explain:

. Which of the options are benefit taxes, which are corrective taxes, and which are both?

. Which of the options is least distortionary? Justify your response.

Be sure to support your post with specific references to the Learning Resources and other peer-reviewed sources and provide full APA-formatted citations for your references.

Read your colleagues'' postings.

Respond by Day 5 to at least two of your colleagues'' postings in one or more of the following ways:
. Share an insight from experience with a tax assessed in your colleague''s posting.
. Offer and support an opinion on your colleagues' assessment of distortion.
. Make a suggestion about the equity of a colleagues' assessment.

Return to the Discussion in a few days to read the responses to your initial post. Note any insights you gained as a result of the comments your colleagues made.

Annual Budget: Local Government Taxes and Service Beneficiaries

The Constitution of the United States describes how ruling power is shared between the national and state governments. However, local governments within the United States have no constitutionally guaranteed powers, since they are considered a subset of the state government, so any power they have is specifically derived from the state government. Included in these powers is taxation and providing services to citizens.

The system of taxation by national and state governments is considered superior to that of local governments. For example, the U.S. national government has the federal income tax and all but seven states (as of 2015) have state-level income tax. Further, most states have specific sales taxes further boosting their revenues. On the other side, local governments are constrained in their ability to collect taxes on businesses by the threat of losing them to adjacent jurisdictions. Property taxes are the main source of local government revenue, yet many states impose limits on how much the locality can charge. Meanwhile, many local jurisdictions have great burdens imposed by populations in need of social services, such as special education for children with learning disabilities. Local governments also provide services that benefit certain segments of the population or that benefit all segments, but indirectly. For example, a downtown beautification program benefits not only those who pay business taxes but also those who enjoy the amenities such as the shopping, restaurants, and theaters of a thriving downtown; a school tax benefits those who have children in school and those who live in a community with a well-educated work force (Moretti, 2012). For this Assignment, consider the wide-reaching effects of taxation on local jurisdictions, including your experience as a taxpayer and community member.

From the Annual Budget for your local jurisdiction, respond to the following questions in a 2- to 3-page paper:
. From which taxes does this jurisdiction receive most of its revenue?
. Who pays these taxes versus who receives the benefits of the services provided by those taxes? Is the benefit direct or indirect? Is it equitable? Why, or why not?
. Is there a connection between the tax and the service they support? Why, or why not?
. Name of jurisdiction: The name of jurisdiction is El Paso County, Texas. The seat of El Paso County is the city of El Paso.
. Web address of the jurisdiction:

The web address of the jurisdiction is: elpasotexas.gov

. Description of the jurisdiction: The jurisdiction is a county in the US state of Texas. It is dominated mainly by the city of El Paso which is the seat of the local government. The county has a population of 800,000 (El Paso County Budget, 2017). This makes it the sixth most populated county in the state of Texas. The local government provides a number of services to citizens. These include the Sun Metro, Mass Transit System; museums and parks; police services; public health services; public library; maintenance of streets; water utility; and aviation services. The city council also provides a number of other community and environmental services.
. Population: As aforementioned, according to the 2010 census, the population of El Paso County is approximately, 800,000. Most of the population resides in El Paso city.
. Total Expenditure: Total expenditure in the most recent complete year, 2016, for which data is available was $ 1.126 billion. For the year 2017, the budgeted expenditure is $ 900.324 million, while in 2018 the budgeted expenditure is $ 896.357 million. This shows that the county is trying to control its expenditures. This has been done mainly to control the fiscal deficit of the local government (El Paso County Budget, 2017). For 2017 and 2018 the budgeted expenditures have been matched with budgeted revenues for the years. Property taxes are the biggest and most important source of revenue for the county of El Paso. Charges for the various services that the county government provides to its citizens, such as water utility services, account for second biggest source of revenue. They are followed by sales tax, which are the third biggest source of revenue for the local government. Other sources of revenue of El Paso county are penalties and interests; franchise fees; fines and forfeitures; license and permits; intergovernmental revenues; revenues from county participation; rents; enterprise revenues, etc. Personal services make up the biggest expenditure of the county government in a year. Personal services mean the costs of wages, salaries and other fringe benefits that are given to employees. Contractual services make up the second biggest chunk of expenditures.
. These are the expenditures for the various services that the county outsources to outside vendors or contractors. Capital outlay is another significant expenditure category for the county (El Paso County Budget, 2017). Capital outlay means expenditure on acquisition of equipment, construction and land acquisition. Other expenditure categories of the county are materials and supplies; operating expenditures; non-operating expenditures; intergovernmental expenditures, etc. The services provided by El Paso County are very similar to the services provided by the jurisdiction chosen by the colleague.

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