Earmarked Taxes for Mental Health Services in the United States: A Local and State Legal Mapping Study

• Published in: The Milbank quarterly 2023-06, Vol.101 (2), p.457-485
• Main Authors: PURTLE, JONATHAN, WYNECOOP, MEGAN, CRANE, MARGARET E., STADNICK, NICOLE A.
• Format: Article
• Language: English
• Subjects: Appropriations; Design; Drug abuse; earmarked tax; excise tax; Expenditures; Financing; Health care expenditures; Health services; Heterogeneity; Humans; Jurisdiction; Literature reviews; Local government; Mapping; Mental health; Mental health care; Mental Health Services; Per capita; Policies; Population policy; Property taxes; public policy; Referendums; Revenue; Sales; Sales taxes; Substance abuse; Tax rates; Taxation; Taxes; United States
• ISSN: 0887-378X; 1468-0009; 1468-0009
• DOI: 10.1111/1468-0009.12643

Policy Points Local governments are increasingly adopting policies that earmark taxes for mental health services, and approximately 30% of the US population lives in a jurisdiction with such a policy. Policies earmarking taxes for mental health services are heterogenous in their design, spending requirements, and oversight. In many jurisdictions, the annual per capita revenue generated by these taxes exceeds that of some major federal funding sources for mental health. Context State and local governments have been adopting taxes that earmark (i.e., dedicate) revenue for mental health. However, this emergent financing model has not been systematically assessed. We sought to identify all jurisdictions in the United States with policies earmarking taxes for mental health services and characterize attributes of these taxes. Methods A legal mapping study was conducted. Literature reviews and 11 key informant interviews informed search strings. We then searched legal databases (HeinOnline, Cheetah tax repository) and municipal data sources. We collected information on the year the tax went into effect, passage by ballot initiative (yes/no), tax base, tax rate, and revenue generated annually (gross and per capita). Findings We identified 207 policies earmarking taxes for mental health services (95.7% local, 4.3% state, 95.7% passed via ballot initiative). Property taxes (73.9%) and sales taxes/fees (25.1%) were most common. There was substantial heterogeneity in tax design, spending requirements, and oversight. Approximately 30% of the US population lives in a jurisdiction with a tax earmarked for mental health, and these taxes generate over $3.57 billion annually. The median per capita annual revenue generated by these taxes was $18.59 (range = $0.04‐$197.09). Per capita annual revenue exceeded $25.00 in 63 jurisdictions (about five times annual per capita spending for mental health provided by the US Substance Abuse and Mental Health Services Administration). Conclusions Policies earmarking taxes for mental health services are diverse in design and are an increasingly common local financing strategy. The revenue generated by these taxes is substantial in many jurisdictions.