What are local taxes used for

what are local taxes used for

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Types of Taxes

There are six taxes that are most significant to local governments: property tax, sales tax, admissions and amusement tax, income tax, gross receipts tax and licensing tax. Property tax is the more significant source of revenue for local jurisdictions. This is also used as the primary source of funding for public education.


According to the National Association of Counties, county governments receive just 3 percent of their overall revenue from the federal government, 33 percent from their own home states and 61 percent from their own sources. Of these self-generated funds, property taxes account for 40 percent of the revenue and general and selective sales taxes account for 13 percent.


Expenditures of local money must be made for a public purpose to protect the health, safety and welfare of the community. The National Association of Counties reports that in 2002, counties spent nearly half of their

resources on social services and education combined, amounting to roughly $33 billion in public welfare programs. These services included cash assistance payments ($7.468 billion), vendor payments ($1.893 billion), medical services ($1.268 billion), as well as other miscellaneous expenditures. Counties also spent $38.19 billion on educational services.

Public purpose has been defined broadly and includes such things as an economic development plan to entice retailers, building a parking ramp for a local business district, and building sports arenas. It also includes more mundane issues such as road resurfacing and the maintenance of public parks.

Local Government Employees

Tax revenue also pays for local government employees and their retirement benefits. This includes local police forces, teachers, health and safety inspectors, and other civil servants.

Bonds and Debt

Local government revenue may also be used to pay off local government debt taken on by the local jurisdiction to fund large development projects such as road construction or housing projects.

Source: ehow.com

Category: Taxes

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