Revenue Administration and Tax Mix

Revenue Administration and Tax Mix

Consider the following scenario for use in this:

The City of Swobodaville, a city in the lower Midwestern states, has not analyzed its tax base for a number of years. A new mayor, elected on a fiscally conservative platform, orders the city manager to conduct such an analysis. The mayor argues that the real tax base has declined in the previous five years. Part of the analysis shows a recent, although small, trend of businesses leaving the city for the suburbs. At the same time, the population is aging. The number of retirees has increased noticeably, but not significantly, in recent years. The analysis reveals that the real tax base has declined slightly in three of the previous five years and increased slightly in the other two years. It also shows that the tax collection rate has fallen off from 95 percent to 93 percent. The city analyzes its position with comparator cities.

The following is discovered:

Type of Tax
Personal Income: Comparator: 11%; Swobodaville: 14%
Corporate Income: Comparator: 7%; Swobodaville: 6%
Sales Tax: Comparator: 39%; Swobodaville: 36%
Property Tax: Comparator: 38%; Swobodaville: 36%
Other Taxes/Fees: Comparator: 5%; Swobodaville: 8%

The assignment: (2 pages)

1. Explain whether the different tax types represent a good mix of revenue for the city.
2. Describe any actions the city should take regarding its tax base.
3. Explain what else you would need to know to conduct a more complete analysis of the tax mix situation in Swobodaville.
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