Impact of revenue sources and expenditures

Running head: REVENUE SOURCES AND EXPENDITURES 1

2

DQ 2 -1 Responses

The impact of revenue sources and expenditures on budget building.

1. There are various sources of revenues as discussed in the text including property taxes, income taxes, sales taxes, use taxes and other taxes. Income taxes are imposed by all levels of government at the federal, state, and local levels. It provides a substantial amount of funds at each level of government. Property taxes are generally imposed at the local level. For instance, in my town, we pay property taxes to the county, city, and school district. These taxes are based on the assessed value of the property which is then multiplied times the various tax rates as set by the three different tax bodies.

Our school district’s tax is the highest followed by the city and then the county. In our state, we have a general sales tax of 6% but an additional 1 percent is added on in the county. It is from these resources that the tax authorities will estimate their revenues and from this estimate they will then estimate the expenditures that will go to make up their new budget.

Is the tax structure similar to ours where you live?

2. The main parts of every budget include revenues and expenditures because it is money collected and money spent. Both, revenue sources and expenditures impact budget building for a variety of reasons. The budget needs to be built based on how much is coming in and how much is going out. According to the Congress Budget Office (2012) tax expenditures have a significant impact on the budget since they reduce revenues by a good amount, but are not readily identifiable in the budget so because of this they are not subjected to annual reauthorization. On the other hand revenue sources impact the budget building due to the nature of what the revenue sources are and contribute to the budget. Revenue is basically money being collected for the budget and tends to come from taxes. Taxes come in many forms from state, property, user charges, and various other taxes that affect each individual. (Lynch et. al., 2017) Being that taxes affect all individuals and can change either by increasing or decreasing the budget needs to be revised to accommodate the increases or decreases. Any discrepancies within the budget need to be handled accordingly and for state and local governments the budget needs to remain in balance. Keeping the expenditures and revenues in line will aid in keeping the budget balanced overall. No matter how the budget is set up it must include both revenues and expenditures and should remain in balance.

References

Congress Budget Office. (2012). Tax expenditures have a major impact on federal budget. Retrieved form  https://www.cbo.gov/publication/42919 

Lynch, T. D., Sun, J., & Smith, R. W. (2017). Public budgeting in America (5th ed.). Irvine, CA: Melvin & Leigh.