In the past, the federal government provided general revenue sharing. The argument for general revenue sharing was
Question:
In the past, the federal government provided general revenue sharing. The argument for general revenue sharing was that the federal government was in a better position to collect tax revenues. States may, however, simply impose a tax that is based on the individual's federal income tax; that is, they could impose a tax that is, say, 20 percent of the federal tax payment. Provided that the federal government shares its information about where individuals live and what taxes they have paid, there would then be little incremental cost of tax collection, either to individuals or the state. Why might the federal government nonetheless be in a better position to collect tax revenues than the states?
Step by Step Answer:
Economics Of The Public Sector
ISBN: 9780393925227
4th Edition
Authors: Joseph E. Stiglitz, Jay K. Rosengard