Rich States, Poor States: An Addendum

A perennial problem in federal systems is the maldistribution of taxable resources which denies some states the ability to finance a basic level of public services. Federal expenditures in the United States constitute one-fourth of GNP; defense and grants explain more than four-fifths of interstate...

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Bibliographic Details
Published in:State & local government review 1989-04, Vol.21 (2), p.50-59
Main Authors: Stephens, G. Ross, Parsons, Karen Toombs
Format: Article
Language:English
Subjects:
Corporate income taxes
Corporate taxes
ECONOMIC ANALYSIS
Export taxes
Federal taxes
INCOME DISTRIBUTION
Local government
Personal income
Personal income taxes
Public Finance
RELATIONS BETWEEN OR AMONG BRANCHES OR DEPARTMENTS OF THE SAME GOVERNMENT
REVENUE-SHARING
State Government
State income tax
Tax revenues
Taxation
Total taxes
UNITED STATES, 1945 TO PRESENT
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Summary:A perennial problem in federal systems is the maldistribution of taxable resources which denies some states the ability to finance a basic level of public services. Federal expenditures in the United States constitute one-fourth of GNP; defense and grants explain more than four-fifths of interstate variation both in per capita federal spending and in state and local tax capacity and revenues. The federal government spends more money in tax-rich states and this spending is directly related to interstate variation in business tax capacity which, in turn, is a major determinant of differences in overall state tax capacity and revenue collection. Lacking a redistributive grant system that places a floor under the tax capacity of our poorer states, federal spending patterns only exacerbate these differences-the rich get richer and the poor, poorer.
ISSN:0160-323X
1943-3409