View Research by Author - J. Fred Giertz

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Pension funding issues have an important, but often hidden impact on the finances of state governments. If pension systems are underfunded, governments must address this problem sooner or later through additional contributions to the systems. Capital gains have had a dramatic impact on state tax revenues in the last decade. However, the indirect effects of capital gains on state finances through state pension fund growth and decline have had an even greater, but overlooked effect on the long-term fiscal health of states. The last ten years has seen the rapid growth of state pension asset followed by two years of decline. Changes in pension fund asset/liability relationships have generated problems for states that are much larger than the current state budget shortfalls. Pension funding issues do not have the immediacy of the state budget shortfalls, but they must be considered when states address long term structural imbalance problems.

Excise taxes are levied on the manufacture, sale, or consumption of a single good or service or on a relatively narrow range of goods or services. They are an example of what have been traditionally called indirect taxes: taxes that are imposed on a transaction rather than directly on a person or corporation. Excise taxes are narrowly based consumption taxes, as compared with broad-based taxes such as a general sales tax or an expenditure tax. This article details the rationale for, economic impacts and use of excise taxes.

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