Research Report Assessing Fiscal Capacities of States: A Representative Revenue System–Representative Expenditure System Approach, Fiscal Year 2012
Tracy Gordon, Richard C. Auxier, John Iselin
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States vary in how much governments collect in revenue and spend on goods and services. To understand the sources of these differences, we examined what states could raise (revenue capacity) and would spend (expenditure need) if they followed national averages, taking into account their own demographics and economic conditions. We found wide variation in both measures and the differences between them—that is, fiscal gaps at capacity. Federal funds closed these gaps in some states, but not all, raising questions about how to design effective federal grant programs as well as state and local tax and spending policies.

Research Areas Economic mobility and inequality Taxes and budgets State and local finance
Tags Fiscal policy State and local tax issues Federal budget and economy
Policy Centers Urban-Brookings Tax Policy Center