5. Fiscal federalism
Keyword(s):
“Fiscal federalism” describes how during the early decades of the republic, Congress gave states money to help pay for new roads and canals, to support their militia, and to build colleges and universities. But the system of granting money to the states grew in the twentieth century, especially after the Sixteenth Amendment gave the national government the right to impose an income tax in 1913. The chapter discusses the federal grants program, which now provides about 30 percent of the average operating revenues of state and local governments. It also considers how the national government uses mandates to influence state policymaking, how states raise revenue through taxation, and the differences in state spending programs.