No, seriously. What the hell do you pay State income taxes for?

Great Debates
1

First off, I am not a teabagger dumbshit who thinks that taxation is bad, and is theft, bla bla bla. I’m quite staunchly in favor of collective bootstrapping - i.e. taxing everyone to provide for everyone.

However, I am also quite staunchly against my taxes primarily being used as a government jobs program. To that end, I am fine* with federal taxes (and I don’t complain about the paltry sums deemed “pork” since it’s an insignificant amount overall) and I am fine with local municipality taxes.

What I cant get my head around**, for the life of me, is what the fuck States do with the taxes they collect?!?

Most of the services any person uses are normally funded by the municipality through property taxes - police, fire, libraries, schools. Most of the transportation services and welfare programs are greatly subsidized by the federal government doling out money or are paid with excise taxes (i.e. gas taxes for roads)

So what the fuck do states need with the income tax rates that they levy? State U? State Police? Court Systems? what else? I can’t think of much more and it really does seem that a large, large chunk of state taxation money is tied up in bureaucratic institutions, no?***

I’ll give you a sampling of some income tax rates to help out. I’ve tried to eliminate states that need state income taxes to offset the lack of other taxes (i.e. no sales tax). These are top brackets, with the (comparatively) low ceiling for their top rates

Iowa: 8.98% @ 65,000
North Carolina: 7.75% @ 60,000
Maine: 8.5% @19,750

Full List Here

*fine in this context doesn’t mean I approve wholesale of all government outlays - rather I am ok with the taxing and spending mechanism working and I recognize that by-and-large federal taxes go to support very worthwhile endeavors

**yes, I can go and read a state budget like anyone else can. I am interested in a little more debate here.
***I’m not suggesting that state U, state police, and courts are bureaucratic institutions. Those are two separate thoughts

2

Try going to your state’s web site. They probably have a pie chart that tells you where they get their revenues from and what the outlays are for.

3

Way to miss “**”

4

Way to put a key point in tiny print so people are likely to miss it. Way not to tell us what type of “more debate” you are interested in, because I ain’t getting it in your OP.

5

Given that states are undergoing severe budget crises, and given that I can’t really see (to my own eyes) what tangible or fundamental services state governments provide (as opposed to local or federal governments) - why do states seemingly charge large amounts of income tax, and what are they doing with it that they can’t quickly solve budgetary issues?

6

Don’t states pay for schools? That’s a pretty big one. Then corrections stuff. There are plenty more, but I’d say there are two decent reasons why.

7

I believe most schools are paid for through local property taxes?

8

I don’t understand your point, either. You want to know what they’re doing with the money but you can’t be arsed to read the budget?

9

The first thing to notice is that, at least in California, property taxes do not cover NEARLY the entire cost of schools. Almost all school districts cover a large part of their budget by funds from the state government. That’s by design – there are several laws intended to spread the wealth from rich areas to poor areas.

Having said, that, taking a look at the 2010-11 California state budget, the state expects to receive about $120 billion in revenue, of which $48 billion is personal income tax.

Almost $50 billion of that goes to education, if you count both K-12 and the university system.

$37 billion goes to health and human services. Mostly for welfare and hospital services, I think.

$12 billion goes to business, transportation, and housing, mostly for road construction and repair.

You can see the details here:

http://www.ebudget.ca.gov/Enacted/BudgetSummary/BSS/BSS.html

10

In California, as I just said, schools take up almost half the state budget.

11

Forget the pie chart, the website alone is chewing up some of the budget.

My other answer is parks, states have a lot of parks.

My last answer is state capitals. Those things are massive, and always in nice parts of the city. Couldn’t they save a lot of money by renting out some cheaper retail space in the crappier parts of town?

12

For Missouri, the state budget for 2009 was something like $23 billion. 40% of that went to Human Services, 23% to Elementary and Secondary Education, 10% to Transportation, and 5.5% to Higher Education (other portions, like Corrections, were smaller).

So, if you want to cut it you need to either dramatically cut Medicaid funding (the largest of the Human Services component, I believe), cut Education, or cut Transportation. Which one would you like?

13

I’m not sure what you’ll get here that you won’t get elsewhere, but looking at one state’s budget (California’s proposed 2010-2011, available here: http://www.ebudget.ca.gov/pdf/BudgetSummary/SummaryCharts.pdf)
6.8% goes to running the state prisons
31% goes to K-12 education
…

Ah, but state funds are a major source of funds for municipalities in many parts of the U.S.
…
10.6% goes to higher education, UC & CSU systems and grants
25.1% goes to health and human services
10.5% goes to business, transportation, and housing
5.6% goes to natural resources and environmental protection
8.9% goes running the courts, legislature, executive branch, and government in general
1.1% goes to state and consumer services - I don’t really know what that is, my guess is the Insurance Commissioner Office, consumer protection offices, etc.
0.4% goes to labor and workforce development - again, I’m not sure what this is, but I guess we could find out.
Does any of that help?

14

I’d let them use my basement for a modest fee.

15

Assuming you’re not just being sarcastic – in most states, those are going to be very small portions of the state budget. Cutting them would result in minimal budget savings, while (at least in the former case) reducing the quality of life for residents.

16

Here are the top ten agencies in Mississippi (from lowest cost to highest cost):
TREASURY
MENTAL HEALTH
ENVIRONMENTAL QUALITY
EMERGENCY MANAGEMENT
TRANSPORTATION
HUMAN SERVICES
MISSISSIPPI DEVELOPMENT AUTHORITY
IHL
EDUCATION DEPARTMENT
MEDICAID

They range from 2% of the budget to 22.5%.

Those top 3 (IHL, Education and Medicaid) took about half.

IHL is the state university system, BTW.

17

Or?

Why not all three? All those sick little morons can hitchhike like they did back in the good ol’ days.

18

Correct. In MO for 2009 (the only budget I happen to have lying around…) Natural Resources was $17 million out of a $9 billion general fund outlay (it had larger expenditures from “Other Funds”, things like fees and use taxes). Conservation was entirely funded by “Other Funds”.

My numbers earlier were a bit off - I was using the breakdown for all funds (which includes Federal money). The breakdown for General Revenue (Income Taxes, Sales Taxes, etc…) shows that Education is 45% and Human Services is 29%. The numbers are different primarily because the Federal Government kicks in a large amount for Medicaid.

19

Minnesota - 45% of the state budget comes from income taxes.

Where it goes:
37.8% goes to K-12 Education
9.3% goes to Higher Ed

47.1% to education

So the next question is, what happens if we get ride of the state income tax?
Well, that $13.8 billion dollars would have to come from some place else. That leaves property tax, sales tax, corporate tax, etc.
I suppose we could raise our sales tax by 200%, but really, do we want that huge increase in a tax that is regressive. All that an 18% sales tax would do is create a traffic jam of people driving across the borders to buy things from the stores that would pop up there.

20

This might sound crazy, but couldn’t people just pay for their own education? Why do you assume it as to be funded by sales tax?