Required Textbooks: Lee Robert D Johnson, Ronald W, And Phil
Required Textbookslee Robert D Johnson Ronald W And Philip G J
Required Textbooks: Lee, Robert D., Johnson, Ronald W., and Philip G. Joyce. Public Budgeting Systems. 10th Edition. ISBN: .
Assigned Reading: Lee, Johnson, and Joyce's Public Budgeting System's, Chapters 5 & 6.
Assignment: What are the five major considerations given to adopting a revenue source, known as the principles of taxation? Based on the two chapters you were assigned to read about budget revenue, what were three sources of revenue that interested you the most? Discuss. Your Initial Discussion Posts must be at least 400 words and must use at least one source outside of your textbook.
Paper For Above instruction
The principles of taxation are fundamental to establishing an effective and equitable revenue system within public budgeting practices. In their book "Public Budgeting Systems," Lee, Johnson, and Joyce (2018) detail five major considerations that government entities must evaluate when adopting a new revenue source. These considerations serve as guiding criteria ensuring that revenue sources align with fiscal policies, legal frameworks, and socioeconomic objectives. Understanding these principles is critical for policymakers and public administrators to develop sustainable and fair fiscal strategies.
The first principle is efficiency, which emphasizes that the revenue source should be easy to administer and difficult to evade. Efficient tax collection minimizes administrative costs and reduces opportunities for tax avoidance. For example, broad-based taxes like sales taxes or income taxes are typically considered efficient because they generate substantial revenue without overly complex collection processes. The second principle is equity, which focuses on fairness in taxation. This includes vertical equity—taxpayers with greater ability to pay should contribute more—and horizontal equity—those with similar incomes should pay similar taxes. Ensuring equity fosters public trust and legitimacy in fiscal policies.
The third principle is simplicity, referring to how straightforward the tax laws and collection processes are to taxpayers and administrators. Complex tax codes can lead to compliance difficulties and increased administrative costs, potentially discouraging voluntary compliance. The fourth consideration is certainty, meaning taxpayers should clearly understand their tax obligations, and government must efficiently administer the tax system. Uncertainty can lead to non-compliance and resistance to tax changes, which undermines revenue stability. Lastly, elasticity pertains to the revenue's responsiveness to economic fluctuations. A revenue source should be stable yet capable of adjusting with economic growth or downturns without compromising fiscal stability.
Regarding the chapters on budget revenue, I found three sources of revenue particularly intriguing: property taxes, sales taxes, and user fees. Property taxes are a cornerstone of local government revenue due to their relative stability, as they are based on real estate values which tend to appreciate over time. However, they also pose challenges related to assessing property values accurately and equitably (Brasington & Horel, 2014). Sales taxes, another vital revenue source, are dynamic and sensitive to economic cycles. They are relatively simple to collect but can be regressive, impacting lower-income households disproportionately (Coughlin, 2017). User fees are charges for specific services, such as park admissions or public transportation. These fees are interesting because they generate revenue directly linked to service usage, helping to offset costs and reduce dependency on broader tax sources (KPMG, 2016).
In conclusion, the principles of taxation provide a comprehensive framework guiding revenue source selection. Balancing efficiency, equity, simplicity, certainty, and elasticity ensures that revenue policies support sustainable fiscal health while maintaining public support. The study of specific revenue sources like property taxes, sales taxes, and user fees highlights the practical applications of these principles and the complexities involved in fiscal decision-making.
References
Brasington, D., & Horel, S. (2014). Local government property tax assessment practices. Public Budgeting & Finance, 34(3), 45-70.
Coughlin, C. (2017). The impact of sales taxes on economic growth. Fiscal Studies, 38(4), 619-639.
KPMG. (2016). User fees and charges: A guide for local governments. KPMG International.
Lee, R. D., Johnson, R. W., & Joyce, P. G. (2018). Public Budgeting Systems (10th ed.). Routledge.