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Local and State Taxation

The New York City Stock Transfer Tax

The New York City Stock Transfer Tax

There has been a large debate regarding the stock tax, which has been proposed for the New York City Stock exchange. Although there is a stock tax currently imposed, the taxes have been given back to taxpayers in rebate form, for almost thirty years. 
In fact, that stock tax rebate is refunded one hundred percent. Many argue for the state to keep at least a portion of the tax, to help with the states major budget shortfalls. However, some stock transfer agents argue that the stock tax would discourage individuals from utilizing the stock exchange to make investments.
While stock transfer agents will admit that the stock tax is still in effect, they also point to the fact that the tax has been refunded in its entirety since 1981. To implement such a drastic change in the stock market, would cause more investors to sell what stocks they have left. In fact, the difficult economy has already led many investors to leave wall street, in search of safer investment strategies. 
 Stock transfer agents argue against the stock tax, even though it is the buyers tax burden, not the burden of the brokers. Many investors are focused on saving every dollar they can, and the stock tax may frighten away savvy investors. If investors were to avoid the New York Stock Exchange, there would eventually be a drastic lose in jobs, both on Wall Street and in supportive services.
Conversely, there are stock transfer agents that are in favor of the tax, because if could help to eliminate the major deficit in New York City and in the state. The amount of stock tax, would depend on the amount of shares purchases, regardless of the dollar value of the stocks. The taxes would be imposed on anyone buying stocks on the New York stock exchange, regardless of where they reside. 
That means that stock brokers in every country, that sell stock on the New York Stock exchange, would be forced to impose the tax on anyone that buys that stock. Absolutely any stock listed on the New York Stock Exchange,would be subjected to the stock tax. The amount of stock tax is relatively low, but trades taking place daily, would produce copious amounts of tax revenue based on volume alone.
Stock transfer agents, in concurrence with many investors, vigorously argue against a halt on stock tax rebates. They believe that the tax would discourage investors from utilizing the New York Stock exchange. However, some stock transfer agents are in favor of the tax, as it is relatively small, even when compared to other stock taxes, in practice around the world. That small tax, could mean big money for the enormous budget short fall now being experienced.

Taxes and Fees of Different Licenses

Taxes and Fees of Different Licenses

Most states have license taxes and license fees. There are myriad of license types, and each is likely to have unique fees and taxes associated with it. For example, in states that allow hunting, hunters are generally required to get a license or a permit to hunt in that state. 
The license fees may help to cover the cost of issues associated with hunting, such as patrols, or environmental issues. The license taxes and license fees, may cover the cost of administering the licenses and enforcing regulations. The license taxes, generally get included in the states general tax revenue and will likely be used to fund activities such as hunting, throughout the state.
Each state has a variety of license taxes and license fees. In some cases, it is individuals that purchase the license, and in others, it is an entity, such as business. In New Jersey, a license, or permit, is required to hike and utilize Newark Watershed land. That fee may have a state tax included in the cost of the license. Those taxes would likely be utilized to benefit state parks and other outdoor sites.  
There are also taxes and fees associated with a drivers license. As an example, the cost of a drivers license may be forty five dollars, then there are taxes and fees added to the cost, which can substantially increase the price of a drivers license. In fact, some states impose added fees for special drivers licenses. For example, states that require a boating license, will likely charge an added fee for the additional license, even if it is really just a part of their drivers license.
States may charge taxes or fees, on any license granted by the state. In addition, the state may impose taxes on licenses granted by local jurisdictions within a state. For example, certain lakes require that each boat display a license on their boat, which proves that they have paid for the access to that lake. It is likely that the boaters fee also included a state tax, and possible a state license fees.
Often times, the license fees and license taxes associated with the purchase of any license, are used to provide funding for activities that include that license. The tax imposed on the license to have access to a lake, may be utilized to keep that lake clean. Additional license fees and license taxes on drivers licenses, may be utilized to fund road cleaning programs. In any case, the fee and taxes associated with any license, are generally utilized to benefit the people that utilize that specific license.

The Importance of Local Taxes Post WWII

The Importance of Local Taxes Post WWII

During World War II the U.S. economy was experiencing unparalleled rates of growth. From 1940-1945 the U.S. economy doubled in size, and the GDP experienced an obscene increase of 38%. 
The effects that World War II had on the U.S. markets were historical and influential in changing the world’s landscape. Following the war, the United States emerged as the world’s lone super power. 
Over the subsequent 30 years, America’s GDP grew at an astonishing rate of 3.5% annually. Simultaneous to the economy’s boom was an equal surge in the country’s population. To sustain America’s perpetual growth, the U.S. tax system had to be altered to meet the needs of a rapidly expanding society.
To properly fund the war, the federal tax system enforced a top tax rate of 91% on America’s wealthiest individuals. Americans who received the lowest rates of pay were still taxed at high levels-18%. This federal tax rate was the highest in U.S. history and accounted for nearly 22% of our country’s GDP. Tax rates remained high in the 1950s and 1960s, but began to diminish throughout the subsequent decades. 
From the end of the war to present day, the federal tax rate has steadily increased over time. As the federal government expands it needs to increase taxes to properly fund its projects. With inflation adjusted, the average American is taxed at about 18 cents per dollar. To meet the needs of a developing super power, both the federal and local tax rate needed to remain at increased levels.
Shortly after World War II the American lifestyle drastically changed. Many soldiers and individuals involved in the war effort, moved back to the States to start a family and settle down outside of the cities. As our nation became industrialized, and our economy boomed, individuals decided to purchase homes. Communities sprouted throughout the country and demand for homes swelled to unparalleled levels.
The increase in demand and population lead to a drastic shift in state taxes. In order to provide for the needs of an expanding population, state governments needed to raise property taxes. Local governments realized their land was precious, and subsequently rose property taxes to increase revenue. 
The increased rate of property tax created a strain between land owners and state governments. State tax increased annually beyond inflation and wages, forcing many Americans to sell their homes due to the mounting levy. This relationship has been greatly altered since the Baby Boom. Local governments realize the importance of property taxes, and have attempted to sustain such increases through the implementation of property tax caps and other progressive methods. 
Taxes are the main source of revenue for governments in the United States. When the population is growing, the governing bodies need to tax its citizens to properly provide public services for them. As communities developed and populations swarmed to the suburbs, local governments raised state taxes out of necessity. When a city, county, or village goes through a population boom a greater demand for certain public services will invariably follow:roads, schools, law enforcement, fire fighters, and parks are all examples of public services that have a demand proportional to the population. 
Schools are a prime example of this directly proportional relationship. More individuals in a community will lead to an increased demand for public education. More buses will be needed to accommodate more students, more teachers will need to be hired, increased food, space, energy etc. The state tax rate, like the federal version shifts to meet certain demands of the country. The only difference between the two rates, is that the state tax shifts to meet local demands, while the federal tax rate adjusts to meet the macro needs of our country.
Following World War II, the U.S. tax system, both locally and federally, was primarily used as a means of financing. Local governments, directly or indirectly, deliver services through levying taxes or subsidizing through tax reductions. 
Although the local tax history in America varies greatly based on state; the relationship between population and the amount of tax levied is singular throughout the nation. The history of state taxes is directly proportional with state needs, and the population shift of the particular jurisdiction. State taxes are not a singular force, but instead, a stream of revenue that shifts along with other economic or societal factors. 

Historical Developments of Taxation

Historical Developments of Taxation

The local tax system in the United States has evolved in response to changes in the role of government and society. The types of local taxes collected, the purpose they serve, and their relative proportions have evolved considerably over the past 200 years. The changes in tax laws can be attributed to both historical events such as wars or changes in sociological patterns. To illustrate the evolution of tax laws in America we will examine the significant periods of United State’s history.
Colonial Times
Before America was established as a free country, the federal government rarely had contact with the individual tax payer. Federal tax revenues were acquired through tariffs and excise taxes. With the Revolutionary War looming, the individual colonies acted as the primary authority on enforcing tax laws. When responsibilities expanded the colonies grew more desperate for money, and new forms of taxes were imposed on their citizens. The southern colonies instituted a form of sales tax where all goods, imports, and exports were subject to taxation. 
The middle colonies imposed a property tax on its citizens, along with a “head tax” which was levied on each adult male. New England colonies imposed a more “modern” tax system where individuals were taxed based on their occupation, and the amount of land they owned. Taxation during Colonial Times were a factor in starting the Revolutionary War. England imposed taxes on colonists to raise revenue for its war with France. Colonists were forced to pay taxes to England but failed to receive representation in the English Parliament. The series of unjust taxes led to the famous rallying cry, “taxation without representation is tyranny.”
Post Revolutionary Era
Adopted in 1781, the Articles of Confederation delegated political power to the individual states. Americans feared that a strong central government would abuse its power, and lose site of the principles that the Revolutionary War instilled. During this era, the federal government did not impose a nationwide tax, and was only given funds through state donations. According to the Articles of Confederation, each state was its own sovereign entity and could impose tax as it pleased. 
This localized tax system was shortly lived; the founding fathers addressed the need to tax on a federal level when the constitution was adopted in 1789. To raise money for the War of 1812, and to pay off the debts imposed by the Revolutionary War, the federal government issued direct taxes on goods such as land, tobacco, sugar, and alcohol.
The Civil War


The local tax systems imposed by the Union and Confederate armies were a major factor in deciding the outcome of the Civil War. To sustain the fight, both sides needed to levy its citizens with a series of local taxes. Local and state governments administered all tax obligations for the Confederate army. Based on a belief of smaller government or a culture that hated taxes, the citizens of the south enjoyed one of the lightest tax burdens for a contemporary society. 
Congress applied a .5% tax on all property and land, which was to be paid to the local governments. Similar to the scenario that played out during the Revolutionary War, the individual states refused to collect the money, opting to raise funds through borrowing or printing notes. Failure to collect the funds resulted in an ineffective local tax system, and the Confederate states were soon burdened with inflation and a financial drought. 
As oppose to the South which raised the majority of its funds through loans, the North enjoyed a highly succinct tax system led by a progressive federal income tax. The North refused to rely on local governments to collect taxes, and instead imposed numerous federal regulations to collect funds. With a developed industrial base, and an established treasury and tariff structure the North proved to sustain itself financially over the course of the war.

World War I and the Great Depression

Many states faced financial problems relative to World War I. Industry workers abandoned their posts to go fight in the war, leaving the states with a lack of production and large employment gap. In 1911, Wisconsin was the first state to adopt a local income tax. Shortly thereafter New York, Pennsylvania and Massachusetts adopted a similar tax to curb the mounting costs driven by the War. When the Great Depression shattered our economy in 1929, the majority of other states instituted the same policy.
   
World War II

During World War II local taxes were decreasing or remaining stable as spending was widely cut back. America was fighting two wars, and the need to build domestically was nonexistent. The majority of state revenue was obtained through the administration of excise taxes. Taxes on cigarettes and motor fuel dominated state revenues during the early 40’s. Following the war the necessity to expand was reversed as local governments increased tax collection to take advantage of rising property value. The populations for many communities was booming. 
This drastic increase offered numerous positive externalities on society, as new communities formed through an expansion in the work force. Industrialization sparked a movement towards production, and many Americans decided to buy homes and raise families. The economic boom and the constant demand for land caused property taxes to rise dramatically. Due to this increase revenues for local governments were spiking. 
When the tax rates increased many Americans were forced to sell their homes as a result of the financial strain imposed by such rising rates. This development soon sparked an innovation in the levying of taxes, in the form of tax caps and regressive tax systems.

Entertainment Tax at a Glance

Entertainment Tax at a Glance

Similar to a luxury tax, entertainment taxes are imposed on items that are considered to be extravagant, or luxurious in nature. Entertainment is not considered a necessity for citizens, and can therefore, be subject to taxation.The entertainment tax often applies to tickets to events, including movie tickets, theatre tickets and concert tickets. 
The tax may also be applied to music Cd’s and DVD’s when rented, or purchased at the store. Each state will have differing rules and regulations that dictate when the entertainment tax is applicable. Most states do not tax events which are considered educational in nature, such as museum trips.
Often times, venues dispute the entertainment tax imposed on their venue. The Wisconsin Supreme Court ruled that the states tax policy allowed for a tax on the Symphony orchestra. Yet other states have a tax policy that would consider that type of event as educational. Each state has differing regulations in their tax policy, which dictates the tax rate and the events that include the entertainment tax.
Generally, states determine imposition of the entertainment tax, based on several factors. In the case of a museum, admission is often tax exempt. The primary purpose of going to a museum, is thought to be educational. Events with an educational purpose, or a fund raising purpose, are often exempt from the entertainment tax.
In some states, tax policy would allow the entertainment tax to be imposed if an event at the museum were for entertainment purposes, such as concerts or other shows. Each state has a tax policy that defines taxation and the items and events to which the taxes apply.
States that impose entertainment taxes, as per the states tax policy, often impose the taxes on events that have a primary purpose of entertainment. The primary purpose question is sometimes challenged in court. In Wisconsin, it was held that music, of any kind, is entertainment, unless the event has a primary purpose of fund raising. 
Primary purpose, is generally determined if more than half of the show, is meant to entertain the audience. The organization in charge of the event, may also play a factor in the primary purpose test. If an educational organization has an event which is in question, the type of organization sponsoring the event may be the determining factor in whether the tax policy allows an entertainment tax exemption.

Estate and Gift Taxes at a Glance

Estate and Gift Taxes at a Glance

The estate tax and the gift tax, have been the subject of taxpayer dispute since both taxes were implemented. The estate tax is imposed after the death of the benefactor, while the gift tax is imposed on gifts made during their lifetime. In most cases, the gift tax is the responsibility of the benefactor, but not always. The estate tax is the burden of the estate, not the beneficiaries. The beneficiaries may be subjected to an inheritance tax, which is a separate from the estate tax.
In most states, children can receive a lifetime gift of a certain amount, tax free. On the federal level, children can receive a gift of up to one million dollars tax free, from their parents, in their lifetime. However, no more than fourteen thousand dollars can be gifted tax free, in any tax year.  Each state may have differing gift limits for the tax year. 
There are also some special considerations for the gift tax. For example, if an individual pays somebody’s medical bills, or tuition, the gift is tax exempt. There does not have to be a family relationship between the individuals, in order for those gifts to be tax exempt. In addition, gifts between spouse, are generally granted a gift tax exemption. Charitable gifts, including those to political campaigns, are also exempt from the gift tax in most cases.
The estate tax is imposed after the benefactor has passed away. The estate tax is paid from the value of the estate. The estate is generally taxed at its value, on the day the benefactor passes away.  The value of the estate is based on fair market value, rather than what any item  cost new. Many items will significantly increase in value, and others decrease, when utilizing the fair market value system.  
Like the federal estate tax, most states allow for deductions from the value of the estate. Those deductions include funeral expenses, benefactor debt and estate administrative costs. Many states have allowed their estate taxes to lapse, in response to the federal government allowing their to lapse. In 2011, the Federal estate tax will be reintroduced, yet some states are choosing not to reinstate their estate tax.
The gift tax is implemented in many states. However, the rate of tax, and allowable deductions will vary in each tax jurisdiction. In addition estate taxes are imposed in several states, but the rates are effected by many intervening factors. Each tax jurisdiction will have varying allowable deductions and exemptions for the estate tax and the inheritance tax.

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