State & Local Taxation

The power to levy taxes is one of the shared powers of the federal, state and local governments. The federal government’s power to levy and collect taxes comes from the Taxing and Spending Clause of the United States Constitution. Likewise, the states get their power to tax from their state constitutions. Virtually every state constitution has a general welfare clause, for instance, which is interpreted as granting the state an independent power to regulate for the general welfare, as well as an entire article on taxation. But the power to tax is not limitless; just as state constitutions grant taxing authority, they also place restrictions on the power to tax. Several state constitutions impose limits on the rates of real property and sales taxes, for example. And most state constitutions include a provision requiring that taxes be levied and collected only for “public purposes,” a term that is inherently vague and has been subject to various interpretations when challenges are raised to new tax proposals.

 

Questions? Contact Adriann Murawski at 202-383-1068.

The opinions expressed in this report are those of the authors and do not necessarily represent the opinions or policy of the National Association of REALTORS®, its members or affiliate organizations.