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April 3, 2014 notes: GOVERNMENT REVENUE

2 types of Government:
1) taxation: coercive and not voluntary
2) private government revenue
a. start using a private business model
b. efficient and equitable distribution of services
c. VOLUNTARY
i. Buyers have a choice not coercive like taxes

3 types of Private Government Revenue:

1) User fees: derived from govt sale of licenses to engage in otherwise restricted
activities
a. Hunting License
b. Driving license
2) User charges: prices charged for voluntary purchased, publicly provided services.
(Publicly funded goods, like defense, not included.)
a. Closely associated with basic government responsibilities
b. Sewage charges, parks, cultural events
3) Fiscal Monopoly: govt receives from exclusive sale of a private or toll good or
service
a. Pure government ownership
b. Revenue from govt operated utilities
i. Gov. would rather have private companies run utilities but they
may take over if they have to
c. State liquor stores
d. State lotteries

User Fees:
have some features of public prices, but reflect revuenue raising potential of the
rule of law.

License taxes imposed to regulate specific and for the benefit of general public

License tax is a flat rate fee

o Ex. Price of liquor licenses can be very expensive depending on govt
quotas
User Charges:
Can induces production and consumption efficiency while gauging citizen
preference for demand of government service
Governments will much rather have user charges than be in charge of utilities.
o Ex. Duke energy provides electicity. Govt charges fees
o Rather have private sector in charge if its more efficient
o But will take over if there is no provider or if government can benefit from
revenues
User charges work when 2 guidelines persist
o 1) Benefits seperability (sp?)
o 2) Chargeability
2

User charges that Bloomington has DONT NEED TO KNOW
1) Household support functions (water, swer, solid waste mgmt.
2) special police
a. stadium events
3) Recreation
a. Recreation facilities
b. Cultural facilities
i. golf course
4) health and hospitals
a. ambulances, innoculations

Four Advantages of User charges
1) can register and record public demand for a service
a. need for more softball fields in the 90s
b. result: twin Lakes softball course was built b/c of demand
c. because of Twin Lakes success, Btown bought recreational center. Now a
big source of revenue.
2) Improve financing capacity
3) Improve operating efficiency bc agency staff must respond to client demand
4) wasnt paying attention.

Public Monopoly Revenue:
3 types:
1) municipal utilities
a. water, electric, transit
2) Gambling enterprises
a. Lotteries
b. Total Gross revenue >72 billion
c. Casinos are becoming more common in states


QUIZ REVIEW
Collectability Ch.
1) 5 reasons why collecting taxes
2) low rates
3) consequences
4) consensus on govt
5) core functions
a. 6 of taxpayer service
b. registerion, etc
Chap 9
3 phases of income tax (no dates, dont need to know constitution)
1
st
cival war
2
nd
WWII
3
rd
social security net b/c of depression
Income tax 2 fold
1) regular income tax
2) payroll tax
Arguments for income tax
3
1) equity, yield, etc
2) dont need to know agruments against

Payroll tax goes to transfer/ mandatory
Know relationship of taxes. Missed other main tax

Ch. 10
4 different sales tax distinctions
general
selective: lodging tax, alcohol
ect
remember each tax has many different distinctions.

VAT: know the difference b/w VAT and retail tax
Know that VAT is consumption tax AND multilevel

4 categories of excise taxes/ luxury
The future of excise taxes
Benefit based
Have example of sumptuary taxes and have examples of all taxes
Sumptuary taxes & ELASTICITY. Not on quiz but may be on test

Property Taxes:
Annual Wealth (?) tax
Real and personal property
Know tangible and intangible in terms of value
o Tangible easy to value assets (double check)
Property taxes are leveled on different classifications
o Residential is lowest
o Commercial is highest
Value of Property taxes
o What property is assessed at is important. NOT price bought.
o Know how it is appraised.
Circuit breakers(???) and deferrals.

Know what LEVY represents (dont need to remember equation)

o Levy is revenue needed for budget
FORMULA: price of a house (assessed value)
EXAMPLE:

NAV=$300,000
R= 3%
Homestead example of 50%
Residential 20%

300,000 * 0.03= $9000
9000* 0.3= $ 2700