THUS far our attention has been confined largely to the federal tax system. State and local tax systems are also of great importance and they, too, affect production and employment. Except during war periods, state and local taxes have always occupied a predominant place in total governmental revenues in the United States. This was true even during the thirties, although federal revenues gained relatively in that period. In 1939, over 60 per cent of all taxes collected were levies by state and local governments. The United States is the only major country in which state and local finance has normally occupied such an important position. Although this predominance will surely not continue, the financial systems of these units will still hold an important place in the fiscal program of the nation.
Modifications in state and local taxation have been occurring for many years; but, under the extraordinary pressures of the depression in the thirties, the pace was so accelerated that the changes have been frequently described as revolutionary. Although the property tax continues to be the overwhelmingly important and sometimes the almost sole support for local governments, it is no longer the principal means of state support, and some states have discarded it entirely. Motor-vehicle taxes, state income taxes (two-thirds of the states), business taxes (under a great variety of names and formulas), special excises (particularly on liquor and tobacco), and general sales taxes (half the states), all scored important gains during the thirties.
Through both shared taxes and state aids, the states have