Research Publication No. 18
As governments expand their activities and as tax burdens approach levels inconsonant with economic efficiency and personal freedom, the possibility of financing some public activities by methods other than taxation gains increasing appeal.
In recent years all three levels of government have increased their reliance on nontax sources, and nontaxes now account for significant proportions of revenue. Receipts from all nontax sources now exceed $40 billion for Federal, state and local governments combined. In terms of cash flows, nontax receipts are second only to those from income taxes.
Nontax sources not only produce revenue. Some can leave a trail of important economic effects in their wake. But since these receipts derive from a diversity of sources, they raise diverse problems. Unfortunately, few of the difficulties which deserve attention have been subjected to careful scrutiny.
This study examines the major facets of nontax revenues which are common to all three levels of government, together with certain other topics considered to be of intrinsic importance. The hope is that this study, although not exhaustive, will provide helpful background for those who must make judgments on the use of nontaxes.