Tax Relations among Governmental Units

Tax Relations among Governmental Units

Tax Relations among Governmental Units

Tax Relations among Governmental Units

Excerpt

The most pressing tax problems of to-day arise out of the complexity and confusion of intergovernmental tax relationships. The Federal Government, 48 state governments, and some 175,000 local tax-levying units are in a condition of confused relationship both as to functional administration and the raising of revenues.

The old theoretical ideal of having each unit of government raise the revenues necessary for the maintenance of the functions which it administers is naive and outmoded, inasmuch as it clashes with the more modern concept that governmental functions should be assigned to those units which can most efficiently perform them, and that taxes should be levied by governmental units capable of assessing and collecting them effectively. A practical application of this theory means that subordinate units find themselves in the position of having to administer more functions than they can finance by means of the levies which they find it possible to utilize effectively. This situation necessitates the granting of financial aid on the part of larger units to subordinate ones.

So far in this country we have developed neither the theory nor the administrative technique to cope with this situation. The problem is aggravated by the extravagant number of small governmental units which can be justified by nothing more plausible than tradition and local vested interests, and by the imperfect distribution of functions from the standpoint of the criterion previously mentioned.

The Tax Policy League considered this problem to be of . . .

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