Do you feel eliminating income tax and applying a consumption tax will broaden the tax base? Why, or why not? What is one thing that you have learned about public finance and budgeting that you want to make sure you carry forward into a career in public administration?
ANSWER THE ABOVE DISCUSSION QUESTION AND REPLY TO MY CLASSMATE’S RESPONSE TO THE ABOVE QUESTION AND EXPLAIN WHY YOU AGREE? (A MINIMUM OF 125 WORDS EACH)
No, I do not feel eliminating income tax and applying a consumption tax will broaden the tax base. Based on my research for this class, revenues are the key to developing a local government’s budget. A major source of funding for local government services is personal property taxes. This revenue would need to be replaced which would possibly cause other taxes to increase in order to fill that gap. According to Hyman (2013), because a consumption tax excludes saving, higher rates on labor income would be necessary to raise the same revenue as an income tax. As labor taxes rise, many hourly workers could decide to decrease their working hours and find ways to make money that is not taxed. This decision would eventually reduce the size of the tax base and the overall tax revenue generated.
In this class, I have discovered that the adoption of a municipal budget is a lengthy process. In order to balance a budget, this process requires various people working together to determine how to collect, administer, and allocate tax dollars. Since the budget of a local government is funded by taxpayer funds, it is essential for public employees and officials to have a code of ethics adopted. The thing that I would like to carry forward into my career in public administration is to keep in my mind that tax dollars fund government operations. Purchasing staff should be strongly discouraged from receiving anything of value from qualified vendors, or from awarding any contract to any organization with which the public official is associated.
Hyman, D. N. (2013) Public Finance: A Contemporary Application of Theory to Policy. [VitalSource Bookshelf]. Retrieved from https://online.vitalsource.com/#/books/9781305474253/