Progressive Policies for Raising Municipal Revenue

Source: Shawn Sebastian and Karl Kumodzi, Local Progress, April 2015

….This report lays out a set of policy and political interventions that cities, regions, and states can make to increase municipal revenue and to make their collections more progressive. Cities have historically suffered enormous budget shortfalls and after the Great Recession, available funds depleted even more drastically. There is a desperate need for more municipal tax revenue and for a more just system for collecting it, instead of the current practice of cities collecting their revenue in regressive ways. A cross the United States, there are major political obstacles to raising any kind of revenue. And yet, although different, the obstacles at the municipal level are in some ways even greater than they are at the state and federal levels. Nevertheless, there are meaningful strategies that cities and co unties can adopt. And there are political strategies that may be effective at generating state – level reform. This report lays these out in detail, discussing the political and policy strengths and weaknesses of each. Viable policy options include (and are not limited to):
Municipal Income Taxes …. Progressive Fees & Fines …. Sales Taxes …. Property Tax Reform ….

…. In addition to these policy reforms that are in many cases legally feasible at the local level, there is also a need to mobilize regionally and trans-locally in order to reform state law. Particularly in the revenue policy and legal space, state law is too powerful to ignore. The institutional and political challenges of organizing for state reform are of course significant, but options include:
• Income Taxes: Expanding state income taxes and returning the revenue to the municipal government from where the taxes are collected.
• Property Taxes: Lifting tax caps and eliminating corporate subsidies and giveaways.
• Sales Taxes: Permitting municipalities to tax services and internet sales.
• Regionalism: Tax-base sharing across municipalities can facilitate growth and reduce inequality. ….