ABSTRACT
Governments exercise their sovereign authority to raise tax revenues for their delivery of services. Since tax payments are involuntary and coercive, scholars and practitioners have suggested numerous principles to render taxation acceptable to tax payers. However, there are three major criteria for tax evaluation: adequacy of revenue collection, efficiency, and equity. These principles for sound taxation do not always dominate tax decisions. Partisan political preferences and interest group mobilization frequently nullify the principles of sound taxation. People know that the best tax is no tax. Unfortunately, governments need resources to deliver public goods and services that the public want. If taxation is unavoidable, the number one rule for sound taxation is the potential of revenue collection. With the supermajority requirements for tax increases, the mismatch between the two requirements leads to tax policy deadlock. State tax policy has been more frequently used as an instrument to foster economic development, but interstate competition through targeted tax incentives has had undesirable effects.
