Federal Systems
The allocation of revenue powers and resources vary within various states. Several countries in these continents have their way of distributing revenue power and the country’s resources to different state levels. According to Watts (2008), the government’s allocation of resources is essential in that it assists federal governments in achieving various policy objectives and economic regulation. Multiple parameters can be used to compare the US federal systems with other national networks. These factors include federal revenues as percentages of total government revenues, conditional transfers as percentages of unlimited federal transfers, and intergovernmental transfers as a percentage of state-level revenues.
For instance, when comparing federal systems in terms of federal revenues as a percentage of total government revenues, the United States has a widely spread federal spending power. By comparing these percentage expenditures with revenue distribution, the range of variation appears to be less. However, federal expenditure proportion is higher in emergent federations than those which are mature. The expenditure falls on an average of 45-60%. The USA has a percentage of 45.9% (Watts, 2008). This figure is slightly lower than Malaysia, Brazil, and Nigeria, implying that the US federation has gained maturity compared to these emergent countries.
Consequently, there is also an enormous variation among various federations depending on and relying on intergovernmental transfers. Being a mature federal system, the US has a lower dependence on federal transfers compared to emergent federal systems such as South Africa, Nigeria, and Spain (Watts, 2008). In terms of percentage of intergovernmental transfers for state-level revenues, the US closely appears with Mexico, Russia, Switzerland, with Canada having the lowest percentage of dependence on federal transfers. Consequently, the degree of state dependence is affected by federal transfers present in the revenues. When the transfers are conditional or unconditional (Gamkhar & Ali, 2008), as Watt (2008) highlights, conditional transfers as a percentage of federal transfers depict an enormous range in the proportion of conditional transfers the US having a 100% compared to Belgium’s 6%. In conclusion, the United States appears to be highly specific in terms of conditionality compared to others.
There are various implications associated with these relationships when making public and administration policies. For instance, these relationships are the base of equalization. Watt (2008) outlines that there exist regional fiscal disparities among various federations. In some cases, there may exist a relationship between the degree of decentralization and the need for equalization arrangements. For instance, with this relationship, the US has centralized revenue sources hence will not require equalization mechanisms to help it enhance horizontal balance compared to other federal states (Lecours & Béland, 2010). This situation alters the process of public and administration policies. Furthermore, these relationships have also developed conditioned transfers that affect the intergovernmental finances of any federal state. The US’ process of making public and administration policies is affected by these relationships just the same way it would have impacts on other countries.
Cities have impacts on the total federal revenue a country gains for every fiscal year. For this reason, depending on cities is identified to have an enormous effect on the USA’s fiscal policy since they tend to be the drivers of issues such as economic wealth. Cities, for example, has the fiscal capacity to extract its resources. Furthermore, cities are also capable of funding essential services and infrastructure through taxes. Raising these taxes by the cities helps boost various economic operations hence impacting the state’s fiscal policy (Lecours & Béland, 2010). The collection of taxes ensures that states. Consequently, cities also receive governmental aids in the form of intergovernmental revenue. When these cities receive high amounts of aids from their states, they might fail to raise property taxes with other user charges in the town since they will be having a source of funds. By failing to impose taxes or charge various fees, the cities will reduce the federal level’s fiscal policy (Gamkhar & Ali, 2008). In summary, the inclusion of cities during fiscal policymaking impacts the process and the federal government.
References
Gamkhar, S., & Ali, H. (2008). Political economy of grant allocations: The case of federal highway demonstration grants. Publius: The Journal of Federalism, 38(1), 1-21.
Lecours, A., & Béland, D. (2010). Federalism and fiscal policy: The politics of equalization in Canada. Publius: The Journal of Federalism, 40(4), 569-596.
Watts, R. L. (2008). Comparing federal systems. Queen’s Policy Studies Series.