Elastic Tax

Barbara Y. LaCost

State tax systems produce the revenue in a state for providing public services such as municipal services, state services, and, of course, revenue for public education. State tax systems are evaluated so that shifts in taxing policy may be implemented to provide different revenue streams or combinations. Economists use several qualities to assess tax systems. Of major importance to state legislatures and budget developers is an adequate amount of revenue for the provision of public services. Adequacy means that sufficient revenues are available to meet a taxing authority's responsibilities as determined by law. Stability and elasticity are required to offer adequacy in funding. Stability refers to the ability of tax revenue to avoid great fluctuations from budget year to budget year, to provide the revenue ...

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