Sharing of Tax Revenues

February 1, 1940

Report Outline
Recent Readjustments in Tax Structure
Extent of Intergovernmental Tax Sharing
Growth of Tax Sharing in the States
Tax Sharing by Federal Government
Special Focus

Recent Readjustments in Tax Structure

Centralization of Tax Administration in Larger Units

Fiscal relationships between federal, state, and local governments in the United States have undergone a marked readjustment in the last decade. Breakdown of the property tax system at the time local governments were being called upon to assume new burdens incident to the depression has led to the centralization of tax administration in larger governmental units, which are better able than the localities to levy new non-property taxes. In some cases, these larger units (i. e., state and federal governments) have taken over both the administration and the financing of public services previously carried on by local governments, but for the most part, local administration has been retained, partial or complete financial support being provided by the central governments either indirectly through grants-in-aid or directly through locally-shared taxes. With a continued extension of governmental functions, intergovernmental tax sharing by these methods promises to become an increasingly important feature of the American fiscal system.

So far, centrally-collected locally-shared taxes, as such, have been imposed only by the states. The federal government has taken over both the administration and the support of certain services, such as work relief, formerly carried on by local governments, but it has shared tax revenues with the states and localities only through the indirect method of grants-in-aid. During recent years, however, federally-collected locally-shared taxes have been proposed as a means of employing the superior tax-raising capacity of the federal government for the benefit of the states and of promoting uniformity and efficiency in the nation's tax system.

Establishment of a system of federally-collected locally-shared taxes was advocated by Mayor La Guardia of New York last December at a forum on tax problems held in Chicago under the auspices of the Illinois Tax Commission. Using the income tax as an example. La Guardia suggested that the federal government impose and collect a levy at a rate high enough to permit distribution of a part of the proceeds to the states. “Under such a plan, all citizens would bear the same rate and this would eliminate competition between the states,” he said. Declaring that real estate could no longer carry the tax burden in cities, La Guardia declared:

ISSUE TRACKER for Related Reports
Feb. 07, 2020  Hidden Money
Jun. 28, 2013  Internet Shopping
Jan. 16, 1998  IRS Reform
Mar. 22, 1996  Tax Reform
Apr. 06, 1990  How Fair Is the Nation's Tax Burden?
Aug. 28, 1987  Taxing Business Services
Oct. 17, 1986  Tax Reform In The States
Sep. 28, 1984  Tax Debate: 1984 Election and Beyond
Mar. 19, 1982  Tax-Exemption Controversy
May 19, 1978  Property Tax Relief
Apr. 07, 1978  Tax Shelters and Reform
Feb. 10, 1971  Property Tax Reform
Mar. 26, 1969  Tax Reform Pressures
Mar. 24, 1965  Excise Tax Cuts and the Economy
Feb. 15, 1961  Flexible Taxation
Apr. 02, 1959  State Tax Problems
Apr. 23, 1958  Tax Reduction, 1958
Aug. 14, 1957  Fast Tax Write-Offs
Apr. 10, 1957  Federal Payments in Lieu of Taxes
Sep. 12, 1956  Corporation Profits and Taxes in Prosperity
Mar. 16, 1954  Shares in Tax Relief
Nov. 21, 1953  Revision of Excise Taxes
Mar. 19, 1953  Federal-State Tax Relations
Oct. 01, 1952  European Taxes and Tax Evasion
Nov. 03, 1950  Excess Profits Tax
Feb. 01, 1950  Tax Loopholes
Jun. 04, 1949  Excise Taxes
Oct. 27, 1948  Postwar Sales Taxes
Aug. 29, 1947  Taxation of Family Income
Apr. 09, 1947  Income Tax Relief
Jan. 11, 1946  Taxation of Cooperatives
Oct. 16, 1945  Federal Taxes on Business
May 08, 1944  Postwar Taxes
Sep. 20, 1943  Sales Taxes
Dec. 05, 1941  New Taxes for Defense
Apr. 05, 1941  Taxation for National Defense
Feb. 28, 1941  Taxation of Alcoholic Beverages
Jan. 11, 1941  Exemptions from Taxation
Dec. 04, 1940  Federal Taxes and Defense Financing
Feb. 01, 1940  Sharing of Tax Revenues
Feb. 02, 1939  Turnover Taxes in the States
Nov. 05, 1937  Broadening of the Income-Tax Base
Jun. 17, 1937  Exemptions from Income Taxation
Apr. 05, 1937  Coordination of Federal and State Tax Systems
Dec. 19, 1936  Revision of Federal Tax on Capital Gains
Nov. 02, 1936  State Taxation of Natural Resources
May 26, 1936  Assessment of Property for Taxation
Apr. 17, 1936  Federal Taxes on Consumption
Mar. 19, 1936  Taxation of Undistributed Corporate Profits
Dec. 17, 1935  Reduction of Tax Burdens on Real Estate
Oct. 21, 1935  Tax Delinquency in the United States
May 21, 1935  Comparative Tax Burdens in America and Britain
Feb. 01, 1935  Federal Taxation of Corporations
Nov. 27, 1934  Elimination of Conflicts in Taxation
Jul. 25, 1933  Taxation of Excess Profits
Jan. 25, 1933  Tax Burdens and Tax-Free Securities
Nov. 23, 1932  The Beer Tax and the Sales Tax
Dec. 19, 1931  Sales Taxes: Federal, State, and Foreign
Sep. 18, 1931  Death Taxes and the Concentration of Wealth
Mar. 18, 1931  Federal Taxation of Large Incomes
Jan. 10, 1931  Taxation of Capital Gains
Nov. 09, 1929  Federal Tax Reduction-1930
Aug. 08, 1927  Federal Tax Reduction—1928
Sep. 27, 1926  Tax Reduction and the Public Debt
Jan. 16, 1926  Taxation of Estates and Inheritances
Nov. 07, 1925  Federal Taxation of Small Incomes
Nov. 28, 1924  Social, Fiscal and Legal Aspects of the Inheritance Tax
Apr. 07, 1924  Causes and Effects of the Tax Return Blockade
Dec. 12, 1923  Tax Exempt Securities
Dec. 10, 1923  Taxation
Federal Taxes
State and Local Taxes
State, Local, and Intergovernmental Relations