Revenue Streams for Public Organizations As noted in the readings, taxes and use

Question

Revenue Streams for Public Organizations

As noted in the readings, taxes and user fees provide much of the revenue for public organizations that is necessary to fund public programs. Yet, despite these revenue streams, local, state, and federal governments consistently face budgetary shortfalls in attempting to fund public programs. What changes, if any, would you make to the way governments obtain revenue for public programs? Consider the following questions: would you make any changes to individual and corporate income tax rates, property taxes, or sales taxes? Would you increase or decrease user fees? Do you think that a flat tax might be a more appropriate way to generate revenue? Would a national sales tax (not to be confused with state sales taxes) be a sensible method to raise revenue?

Explanation / Answer

Abolishing the income taxes for individuals would be a good idea to generate revenue. Because by doing so those taxes would be converted into savings which are nothing but investments. Through the investments more people get employment and purchasing power increases. Which in turn increases the revenue from corporate income taxes, property taxes or sales taxes. So, just by foregoing individual income tax, government can earn taxes from the above said three heads.

User fees can be kept constant.

Flat rates would bring in a regime where people stop using innovative ways to hide the additional income that they earn which is above a specific tax bracket. But the flat tax rate would increase the burden on low income group. So the reducing the number of tax brackets can be considered a sensible idea.

States which perform well earn more sales taxes and hence can afford more public programs. So, when National sales taxes are introduced, there will be a dispute in distributing the revenue among states. Hence, unless and until the government comes up an effective and mutually agreeable formula to distribute the revenue, national sales tax is not a sensible idea.

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