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Taxation & Government

Taxation & Government:

Abolition of State Income Taxes

By:

Anna M. Bucciarelli

ACC-131

Federal Income Tax

The idea of financing state services without an income tax is hardly radical. Nine states today – Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington & Wyoming mange well without one. With a few exceptions, the states without an income tax are America's most prosperous. In this paper we will be looking at a state that has a personal income tax, North Carolina and one of the nine states that do not, Florida.
It is a widespread belief that if the lottery were allowed in North Carolina taxes would be cut and more money focused on education costs. However, that is not the case, in article printed in the Fayetteville Observer, 14 October 2007¸that the revenue generated from the sale of lotteries would not be enough to complete construction of one half of an elementary school. Of course it has only been in existence for a couple of years and we may not have seen the true profit potential of the lottery. Hence is a major factor on why we still pay personal income taxes.
At the federal level, federal tax revenue comes from personal income tax, and payroll taxes. These taxes are used to fund social security payments, the costs of national defense, medical expenditures and interest payments on the national debt. These funds are not necessarily funneled down to the state and local agencies and thus make it necessary to for states to impose their own taxes. It is not mandated which taxes the state charges its citizens in order to run their state from federal regulations so these so called nine "breakaways" have thought outside the box. They have imposed their own taxes and fees and seem to be excelling and meeting their financial goals.
North Carolina receives about $26 billion from many sources, including taxes, fees and funds from the federal government. After taking out federal monies which must be used for specified types of...