While the American Recovery Plan Act provides local governors flexible funds to replace revenue lost due to the pandemic, local governments should take this opportunity not just to replace revenues, but to review and reform revenue raising. Revenues can consist of local taxes, such as sales taxes and property taxes as well as non-tax revenue such such as fines and fees. Local governments’ excessive reliance on fines and fees can disparately impact Black residents due to both ticketing practices and the ways in which fines are collected. Low-income taxpayers and taxpayers of color also suffer disparate impacts from the ways cities and towns assess and collect taxes. To make revenue systems more equitable, policymakers should begin by analyzing where there are disparate outcomes and determine their sources. This article outlines key questions to ask to make revenue systems more equitable, and provides resources and examples of reforms.
You can read the full text of the article here.