Taxation and Distribution Research Paper

Free Taxation and Distribution Research Paper:

Within the scope of this research, we will discuss the process of taxation and the distribution of that money to schools. The sources of taxes to be used for school funding are supposedly numerous: there are personal, corporate, property, and many other types of taxes. However, the problem is that those money are also intended for many other purposes. Moreover, arguments against increased taxation for schools, or any other purpose, can be politically powerful. Beyond general resistance to increased taxes, a majority of adults do not have children in the public schools and often do not share parents’ urgency for increased funding. (As one supporter of reform put it, sharply and not altogether accurately, “The opponents are almost all rich people without kids who are upset because they face tax increases on seven-zillion-dollar houses.”) (Haney, 2004)

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Seniors are also a growing share of the American population, they vote more than young people, and they can get angry. A 73-year-old Democratic Party chair in one community facing reform decided to vote Republican for the first time in his life because of his fear that “we’re getting taxed out” of town. (Datnow, 2002) With other factors held constant, the higher the proportion of elderly voters in a district, the less that district spends on public schools. (Datnow, 2002) Young people support expenditures for schools more than senior citizens: on surveys the youngest respondents are most likely to endorse spending budgetary surpluses on education, whereas older respondents most support spending on Social Security. Similarly, parents of children in public schools are more likely, and parents of children in private or parochial schools less likely, than the median voter to support tax increases or bond issues for education. (Datnow, 2002)

Raising property taxes to support schools within a district often proves very difficult, and raising state sales or income taxes to support schools across the state spurs even fiercer debates. These problems are compounded if a sizable portion of the state funds is intended for poor urban districts; controlling for a state’s wealth and age structure, the greater the proportion of its population that lives in urban areas, the less it spends on public education per child. Management and bureaucratic problems that have plagued urban districts, family and neighborhood problems that burden urban children, and public assertions that money will not matter for them, all make people in wealthier districts question the value of increased educational spending for others. (Haney, 2004)

Raising state income or sales taxes and spending the new funds for poor or urban children has therefore proven to be politically very difficult. In the course of heated debate, redistribution of public revenues can sound like the loss of local control of the schools, an unpopular idea to say the least, and can lead otherwise sensible citizens to call school finance reform laws “horrendous” or “a great rape.” (Mirel, 2001)

Americans remain deeply committed to localism as a political principle. Even more than a citizen’s race, class, or residence in a city or a suburb, the (often mistaken) belief that local control will be threatened is usually the best predictor of opposition to school finance reform. As the governor of Maine pointed out, “We’re the land of the town meeting and direct democracy. People in Brunswick don’t want people in Topsham telling them how to run their schools.” (Haney, 2004)

In short, debates over school finance reform are difficult. They involve class differentiation and racial or ethnic divisions; they become entangled with issues of local control and state prerogatives; they are concerned with tax burdens and effective use of resources; they raise the specter of generational conflict; and they revolve around ideological tensions between the pursuit of individual success and the collective goals of equal opportunity and social justice.

The equalization of local, county, and full state funding systems is quite an important issue in school funding debates. It is not surprising, therefore, that in the middle of school funding controversies the governor of New Jersey was pictured on the cover of the New York Times Magazine as Robin Hood or that the state commissioner of education in Vermont was labeled a “Communist Dictator.” (Abernathy, 2001) These debates involve all citizens and affect the distribution of billions of dollars. There are good reasons why they have dominated the political life of many state capitals for years.

School finance, like most educational policy issues, is fundamentally a matter for states to decide. They are responsible for choosing the form of taxation, setting the process to determine budgets, and allocating responsibilities between the capital and the districts. More generally, states set most education policy, raise the necessary state revenue, determine the powers of school boards, draw district boundaries, create statewide standards, and do statewide assessments. They have, however, turned much of the authority for actually providing and administering education over to local districts and have given them the right and responsibility to raise property taxes to support their schools. Local districts therefore hire and fire, set budget figures, determine curricular details, and most importantly for school finance, secure local revenue.

The impact of district power equalization could be enormous. There are almost 15,000 school districts in this country, with no consistent relationship between the size of a state and the number of its districts. California has almost a thousand districts, but the even larger state of Alaska has only 53. (Haney, 2004) Some small states have 75 or fewer districts, and Hawaii has only one, but New Jersey, a small state, has 608. Nationwide, districts pay about 44 percent of the total cost of primary and secondary education, most commonly through property taxes. States currently pay another 48 percent, a share that has risen about ten percentage points over the past three decades. (Haney, 2004)

The federal government contributes most of the remaining 8 percent (down from a high of almost 12 percent two decades ago), with the largest amounts of federal money going for special education (almost nine billion dollars in 2002) and aid to low-income schools (over 12 billion dollars). The mix between local and state taxes differs considerably from state to state, and surprisingly few states mirror the national percentage. State revenues pay 73 percent of the costs of education in New Mexico, 69 percent in North Carolina, and 64 percent in Delaware, but less than 10 percent in New Hampshire. (Haney, 2004)

Local districts, of course, vary greatly in their ability to pay their required share. In Connecticut, for example, the town with the most taxable property per student has nearly 15 times as much as the town with the least. As a result property-poor districts must tax themselves at a higher rate than property-rich districts to provide anything like a comparable level of per-pupil funding; in Connecticut the highest effective tax rate for education (in very poor towns) is three times greater than the lowest (in wealthy towns). Similarly, of the 238 municipalities in the Philadelphia metropolitan area, 25 (including Philadelphia) had a tax base per household of under $78,000 in 1995. But 39 enjoyed a household tax base of over $230,000; in three of them the base was $350,000 or more. (Not surprisingly the tax base map can be overlaid almost perfectly on a map showing the proportion of non-Anglo students in these districts.) (Haney, 2004)

The need for non educational services can also vary greatly across districts. Urban areas, in particular, face an especially high municipal overburden; that is, they have a high demand for police and fire services, sanitation, and emergency health facilities typically funded from the same insufficient property tax essential to fund the schools. The highest effective tax rate for noneducational services in poor Connecticut towns is almost 19 times greater than the lowest rate for the same kinds of services in wealthy towns. The level of municipal overburden is highly correlated with scores on the Connecticut Mastery Test and with dropout rates.

As of 2006, plans were in place for universally available preschool programs for three- and four-year-olds in the poorest districts, comprehensive school reform programs in every school in the designated poor districts, and a massive school construction program costing billions of dollars, the largest in any state. After a decade, despite serious conflict over taxation and distribution and continued low-level contention, schooling opportunities for the poorest students have improved, and more children have the chance to meet their goals through public education. The gap between ideology and practice in the American dream has narrowed in the public education sphere.

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