State and Local Taxation in the Southeast and the War

Abstract

The rise in the general price level and its by-products have focused recent interest on the outlook for state and especially for local revenues. Thus, it is particularly worth while to ascertain now what the war period has done to the state and local tax structures; it may prove doubly important if, as now seems probable, the federal government not only declines to assume added financial responsibility for education, conservation, and other so-called state functions, but also actually reduces its contributions of past years. In a single brief paper one must select among needed analyses. An attempt will bemade to develop the most significant facts bearing on two main classes of questions: (a) How has the war period influenced state tax revenues, and (b) how has the war period influenced combined state and local tax revenues? The first problem is important mainly because the major fluctuations have occurred in state, rather than in local, tax collections. Consideration of state revenues alone will prove gravely misleading unless the limited policy significance of the data is clearly understood. And so it will be kept in mind that in the discussion of state tax revenues one is looking at widely varying parts of the whole picture. It is a matter of purely local policy which governmental functions are assigned to state and which to local government. The states are not by any means in agreement.' For this, among other reasons, no inferences as to revenue reactions to war conditions can be based on state data alone.