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Abstract: This Article explores the often-overlooked role of small-base taxes in local government finance. While tax scholarship on local revenue typically centers on the property tax, local governments across the United States also rely on a patchwork of narrow taxes—such as occupational licensing and hotel occupancy taxes—to close budget gaps and fund essential services. This Article examines the legal authority, administrative capacity, and political dynamics that shape these small tax bases. It argues that many of these taxes pose distinct challenges due to their complexity, low salience, and limited enforcement infrastructure, yet they remain integral to local fiscal policy because of structural constraints on taxing authority. Through an in-depth exploration of local occupational licensing taxes, this Article offers new insights into how local governments navigate fiscal federalism under conditions of legal and institutional constraint.
The first part of this Article offers a descriptive account of local revenue. The second part explores some of the small bases on which local governments rely. The third part discusses the overlapping legal, administrative, and economic issues raised by small-base reliance and suggests that stakeholders need more research about costs of such reliance.
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