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(Continued from previous article) So two of the major problems of the land value taxation system – as opposed to the regular real estate system adopted by most of the United States of America – involve gross financial situations that will be borne out of the system, if one takes into account the “individual” and “business” factors of the equation. In both the aforementioned downsides to the land value taxation system, we find that the problems in revenue and the reactions to the decrease in the asset value largely rely on community establishments and businesses as well as land property owners. So in this very small way, supporters of the land property value tax system could argue that the current paradigms of business, assets and the like create problems for the collection of community revenue, and not the tax system. But these two reasons are not the only arguments AGAINST the land property value tax. Perhaps the biggest point against the land value property tax system would be the fact that in some areas – states, counties or municipalities – the system may be able to create some legal conflicts.

In the United States of America, especially, we have to take note of the fact that most of the American states have at least one of those uniformity clauses which, as the name implies, suggest a degree of uniformity in collection of taxes such as the excise taxes, the impost taxes and the duties taxes. Of course, each state has a different wording and interpretation of this uniformity clause – this clause is geared towards the maintenance of equality throughout the United States of America, favoring no one state over the others. And because of these different interpretations of the uniformity clause, some states can and will rule land value taxation as unconstitutional. Places like Pennsylvania, of course, have a uniformity clause that allows land value taxation, but for the most part, each and every state in the United States of America has a legal ruling on the status of land value taxation. Much of the problem lies within how each state constitution defines (or does not define at all) the types of property classification – these definitions, of course, fall under the uniformity clause. For the most part, state courts have not yet ruled specifically that improvements and land are separate “classes” of property – which would, of course, provide the need for the application of the uniformity clauses. But, as a rule of thumb, most states allow taxation of each type of property (such as personal property, improvements, and land property) AS LONG AS THEY ARE UNIFORMLY TAXED.

Now, most supporters of the land value taxation system point out that so far, no state (except for that one case back in 1989, in Hyattsville, Maryland which ruled that the area’s specific use of land value tax goes against their constitution) have solidly and specifically declared under the uniformity clause that land value taxation conflicts with the state’s constitution. In fact, they could also point out that there are doubts as to whether or not uniformity clauses actually specifically state that separate land value taxation is prohibited. That being said, they firmly state that the “legal problem” argument in the state level is pretty much moot.

That is not to say, however, that the legislature of the local authorities would not be problematic in this case, because at the moment, it would be legislation on the local level that blocks the ability of the separate land value taxation system from pushing through to becoming standard in the state and local taxation system of the United States of America. Some local legislations, after all, allow for particular municipal bodies to impose separate land value taxation while others do not, and some counties specifically make provisions to prevent any action that would lead to the implementation of the separate land value tax in their territories.

Although it is not necessarily applicable to the United States of America, critics of the separate land value taxation system who use the legal problem arguments against it point out that in certain areas, it is quite difficult to ascertain the land title property ownership of the land, thus making it virtually impossible to properly implement the tax. Because the land value property tax is firmly dependent on the payment of the land property owner ALONE and no one else, the event of the undetermined ownership would throw the entire system off and would further decrease revenue.

That being said, however, the issue of the land value property tax system just proves that each and every state as well as each and every locality has indeed the right and authority to impose taxes on their citizens, provided that they are bowed to a higher (that is to say the federal) constitution of the United States of America.

That just about wraps up the discussion of the most important type of tax on which the state and local governments depend on for revenue – the property tax, and its different incarnations throughout the many states of the United States of America. Now, we move on to discuss (a little less thoroughly) the other, different taxes levied on citizens on a state or local level.

Again, certain taxes like sales taxes, excise taxes and use taxes are implemented to supplement the revenue already collected from the property tax systems – with sales tax being a tax that you pay at the point of purchase of a specific service or good, excise taxes being a tax levied on goods produced WITHIN the United States of America (which typically involve gasoline, alcohol and tobacco products) and use taxes being a kind of excise tax imposed on items from outside the state. There are special taxes, like the severance tax, which are imposed in states that produce timber, minerals and oils (in other words, energy products). Severance tax is a kind of ecotax (that is, a tax that promote ecologically sustainable activities via economic incentives) is a tax that is paid on the PRODUCTION, and not the SALES of products. Then, there are taxes paid for using hotel rooms within the state, which is beneficial for the community in that they do not necessarily have to pay this; out-of-towners are expected to do that. Some states, however, choose to not impose sales taxes, and neither do some localities.

These are not, of course, the only means of generating extra revenue for the state. Another means by which the state or local authorities can collect money from their citizens would be to impose an income tax.

To be sure, income taxation on the state and local level is a little different from income taxation at federal level, although income taxation on the state and local level is pretty much based on the federal income tax system. Of course, income tax on the state and local level has to be tweaked somewhat in order to make sure that it does not in any way undermine the federal income tax that all qualified taxpayers have to pay – and in order to make sure that the income tax system would be specific to the state and would not in any way go against the constitution of the said state. One of the income tax tweaks on a state or local level would be to include one or two income sources in the state definition of income that is not included in the list of taxable income on the federal level.

What this means, though, is that the income defined by the state is added to the federal taxable income so that the state income tax may be determined. Some localities can even impose income tax on a non-resident, provided they work in the area of jurisdiction. However, it must be pointed out that not all states and localities impose personal income tax, and some states only tax dividend and interest in corporate income.

Strangely enough, state government more often than not is financed by sales and income taxes coupled with corporate registration fees, despite the fact that much of their taxation power involve property taxation (although some may argue that they have given the power of property taxation to more local governments).

State governments in the United States of America may have considerably less power than the federal government in terms of powers of taxation, but that does not at all mean that they have less influence. If anything, state and local governments have more influence over their citizens than the federal government, as they are closer to home, and as the benefits of that level of taxation is better recognized. Either way, however, taxation issues that have been brought up – within states and municipalities as well as across them – allow the convictions of the communities and citizens to be recognized and, to some degree, respected.