Significant Features of Fiscal Federalism 1988 Edition
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—. ,., .,”,.... ,.,. Preface Rdeaee of this volume of Significant Feahree and public finance analysts find the new as well ofFiscal Federalism represents en important de- as updated information helpful in their research. parture from earlier editions of this report— Of course, given the early publication date, namely, its December publication date. In order certain data series typically found in Significant to respond more readily to the needs of state ax- Feahree were omitted from this volume. Nearly ecutive end legislative oftlcials, their staffs, and all of the omitted series of tables rely on data col- those who interact with them, thk volume is be- lected by the Governments Division of the U.S. ing released immediately prior to the opening of Bureau of the Census—data that were not re- the 1988 state legislative sessions. In the past, leased until December 1987. Based on these data, Significant Features has been released in mid- Volume II of Significant Features, 1988, will be spring. It is hoped that thk early release date will issued in the spring of 1988. The second volume enable the many users of Significant Features to will contain state-by-state information on the make better end more informed decisions baaed distribution of revenue sources for state govern- on more timely information. It is ACIR’S inten- ments, locaI governments and state-locaJ govern- tion to continue issuing Significant Feaiures in ments combined; the distribution of expenditures two volumes, commencing with this 1988 edi- by function (percentage of government budgets tion. devoted to education, highways, public welfare, Thie volume is devoted primarily to federal, etc.) will also be included. The various time-se- state and local tax information, including mate- ries data found in earlier editions of Signi@mt rial relating to tas rates, bases, exemptions, ex- Fecdures will be published in Volume II–such as clusions and deductions. A flurry of tax activity the percentage of particular government func- occurred in state and local governments during tions funded in each state by the federal, state 1987 in response to the Tax Reform Act of1986 as well as fluctuations in local end regional econo- and local governments, and measures of state mies, state and Iocaf program initiatives and centralization of the various government func- changes in federal policies that directly or indi- tions. Rankings of state-local revenues and ex- rectly effected state and local governments. The penditures will also be incorporated into Volume magnitude end significance of this activity can be II as will updates of the first eight tables of Vol- observed throughout this volume. ume I—the national trends in revenues, expendi- Volume I contains updated information for tures, interest payments and debt for federal, income, general sales, property, gasoline and state end local governments. cigarette taxes, information that is included We believe this “early bird” volume ofSignifi- every year in Significant Fedures. Users will cant Features of FiscaJ Federalism reflects also find date on alcoholic beverage taxes estate, ACIRS sensitivity to the need of decision makers inheritance and gift taxe~ property transfer to have ready access to timely and accurate data. taxeq and fees and taxes on automobiles. This in- We trust you wiII continue to find this publica- formation is published only periodically in Sig- tion helpful in your studies of public finance and nifhznf Features. It is hoped that policymakers fiscal federalism. Robert B. Hawkins, Jr., Chairman Acknowledgments This report on Significant Features of Fisazl A sincere expression of gratitude is due the Federahm was prepared by ACIR research aeeo- staff members of state executive and legislative ciate Clay Dursthoff end Kathryn Smerko, sum- oftlces for responding to our requests to review mer research associate. Michael Lawson, public preliminary versions of numerous tables in- finance analyet for the Commieeion, closely su- cluded in this publication. A special thanks goes pervised all phases of the preparation of the ra- out to those who spent additional time clarifying port. particularly perplexing points over the tele- Mary Dominguez wee indispensable in bring- phone. ing this report to ihition. The professional secre- Of course, full responsibility for the content tarial assistance provided by Ms. Dominguez was and accuracy of this report rests with the Com- Weatly appreciated. mission end its staff. John Shannon, Executive Director John Kincaid, Research Director Contents Section /: Fiscal Trends Toble 1 Government Expenditures, From Own Source, Selected Years 1929-87 . 2 Tabk 2 Government Expenditures, After Intergovernmental Transfers, Selected Years, 1929-87 . 4 TobI%3 Government Receipts, Selected Yeare 1929-87 . 6 Toble 4 Government Debt, Selected Years 1929-87 . 8 Table 5 Net Interest Payments, Selected Years 1929-87 . 10 Table 6 Federal Government Expenditures, Selected Years 1954-87 12 Tahk 7 Federal Budget Receipts, outlays, Surplus or Deficit, Total Debt and Interest on Debt, 1789-1989 . 14 Table 8 Federal Grants-in-Aid in Relation to State-Local Outlays, Total Federal Outlays and Groee National Product, 1955-88 16 Table 9 Per Capita Federal Expenditure by State and Region, Fiscal Year 1986 . 16 Section 11:Tax Rates FEDERAL TAXES Toble 10 Federal Individual Income Tax Rates . 20 Table 11 Federal Corporate Income Tax Rates . 20 Table 12 Selected Federal Excise Tax Rates. 21 Table 13 SeK-Employment, Social Security, and Unemployment Compensation Taxes . 21 STATE AND LOCAL TAXES Table 14 1987 Changes by State . 22 Income Taxes Tab1215 Summary of State Government Individual Income Taxes, Personal Exemptions, Standard Deductions, and Deductibility of Federal Income Taxea, Tax Year 1967 . 26 TobZe 16 State Individual Income Tex Rates for Tax Year 1987 . 28 Table 17 State Individual Income Taxex Exclusions and Ac@stments to Income, Tax Year 1986 . 34 Table 18 State Itemized Deductions, Tax Year 1987 . 42 Table 19 Local Government Units with Income Taxes, Selected Years 1976-87 . 46 Toble 20 Local Government Income Tax Bates for Selected Citiee and Countiaa, by State, 1987.. 48 Tab.k 21 State Corporate Income Tax Bates for Tex Year 1987 . 50 General Sales Taxes Tcble 22 Major Features of State Sales Tax . 54 Table 23 State General Sales Tax Rates, in Percent, as of July 1 of Each Year . 56 Table 24 Local Government Units with Sales Taxes, Selected Years 1975-87 . 57 Tcble 26 Combined State-Local General Sales Tax Rates, Selected Cities, October 1987 . Excise Taxea Tob.rQ26 State Cigarette Tax Bates, in Cents Per Pack . 62 Table 27 State Gasoline Tax Bates, in Cente Per Gallon . 63 Table 28 State Alcohol Beverage Excise Tax Bates-License States as of July 1867 . 64 Table 29 State Alcohol Beverage Excise Tax Bates, Markup end Method of Contrbl–Control States, es of July 1987 . 68 Property Taxes Table 30 Average Effective Property Tax Bates, Existing Single Family Homes with FHA Insured Mortgages, by State and Region, Selected Years 1958-86 . 70 Death and Gift Taxes Table 31 Types of State Death Taxes, July 1, 1987 . 71 Toble 32 State Estate Tax Bates and Exemptions, July 1, 1987 . 72 Table W State Inheritance Tax Rates and Exemptions, July 1987 . 74 Table 34 State Gift Tax Bates mid Exemptions, July 1987 . 79 Transfer and Automobile Taxes Table35 Stateawith Transfer Taxes, July 1987 . 80 Table 36 Automobile Taxes and Fees, July 1987 . 84 Miscellaneous Tables Table 37 Dates of Adoption of Major State Taxea . 96 Table 38 Representative Tax System Tax Capacity Indices for 1985 and Selected Prior Years . 98 Table 39 Representative Tax System Tax Effort Indices for 1985 and Selected Prior Years . 99 Table 40 State Per Capita Personal Income Indexed to U.S. Average, Selected Years 1929-f36 . 100 Table 41 State Budget Cycle and Fiscal Year Schedule . 101 Table 42 State Constitutional Limitations on State Borrowing, 1986 102 Tab.k 43 State Constitutional and Statutory Limitations on Local Government Power to Issue Gene~al Obligation Lon&Term Debt, 1986 . 104 Microcomputer Diskette Series Order Form . 111 Section I Fiscal Trends 2 ACIR Table1 GOVERNMENT EXPENDITURES, FROM OWN SOURCE. I SELECTED YEARS 1929-87 Total Total Calendar Publlo Federal State-Local State Local Amount (In billlone of current dollare) 1929 $10.4 $7.7 $2.12 $5JY 1939 17.6 6.6 3.7* 4.9 1949 60.0 16.0 8.6* 9.2, 1954 97.6 70.9 27.3 12.8* 14.51 1969 131.9 91.7 40.2 19.0 21.2 1964 177.9 119.5 58.4 28.2 30.2 1969 290.3 191.3 99.0 51.4 47.6 1974 467.5 S05.5 162.0 90.9 71.1 1979 766.3 521.1 247.2 144.7 102.4 1981 1,006.6 703.3 303.5 177.0 126.5 1962 1,111.6 781.2 330.4 191.4 139.0 1962 1,169.9 635.9 354.0 202.1 151.9 1984r 1,277.9 695.6 362.3 224.6 157.7 1965r 1,401.4 964.6 416.8 246.9 169.9 1986r 1,467.0 1,032.0 455.0 265.6 169.5 1987e 1,568.3 1,062.4 505.9 n.a. n.a. As a Percentage of GNP 1929 10.0% 2.6% 7.4% 2.0% 5.4% 19s9 19.9 9.9 9.4 1949 22.0 16.1 6.9 :: u 1954 26.2 18.9 3.4 3.9 1959 26.6 18.5 :? 3.6 4.3 1984 27.4 16.4 4.3 4.6 1969 30.1 19.8 lR 5.3 4.9 1974 31.7 20.7 11.0 4.8 1979 30.6 20.6 9.9 U 4.1 1961 33.0 23.0 9.9 5.8 4.1 1982 35.1 24.7 10.4 4.4 1983 34.9 24.5 10.4 :: 4.5 1964r 33.9 23.7 10.1 6.0 4.2 1985r 34.9 24.6 10.4 6.2 4.2 1966r 95.1 24.4 10.7 6.3 4.5 1987e 34.9 23.7 11.3 n.a.