The Constitution of the United States describes how ruling power is shared between the national and state governments. However, local governments within the United States have no constitutionally guaranteed powers, since they are considered a subset of the state government, so any power they have is specifically derived from the state government. Included in these powers is taxation and providing services to citizens.

The system of taxation by national and state governments is considered superior to that of local governments. For example, the U.S. national government has the federal income tax and all but seven states (as of 2015) have state-level income tax. Further, most states have specific sales taxes further boosting their revenues. On the other side, local governments are constrained in their ability to collect taxes on businesses by the threat of losing them to adjacent jurisdictions. Property taxes are the main source of local government revenue, yet many states impose limits on how much the locality can charge. Meanwhile, many local jurisdictions have great burdens imposed by populations in need of social services, such as special education for children with learning disabilities. Local governments also provide services that benefit certain segments of the population or that benefit all segments, but indirectly. For example, a downtown beautification program benefits not only those who pay business taxes but also those who enjoy the amenities such as the shopping, restaurants, and theaters of a thriving downtown; a school tax benefits those who have children in school and those who live in a community with a well-educated work force (Moretti, 2012). For this Assignment, consider the wide-reaching effects of taxation on local jurisdictions, including your experience as a taxpayer and community member.

From the Annual Budget for Alabama , respond to the following questions:

• From which taxes does this jurisdiction receive most of its revenue?
• Who pays these taxes versus who receives the benefits of the services provided by those taxes? Is the benefit direct or indirect? Is it equitable? Why, or why not?
• Is there a connection between the tax and the service they support? Why, or why not?

Answer rating: 100% (QA)

Local governments in the United States primarily rely on property taxes as a major source of revenue ... View the full answer