The US budget and taxation systems are very complicated. At the same time, they are traditionally oriented on the maximization of the effectiveness of the use of the national wealth and funds that are accumulated in the budgets. Basically, the US budgetary and taxation systems serve to the effective redistribution and use of the national wealth to maintain the high standards of life all over the country. At the same time, it is worth mentioning the fact that each state may have a different budget and taxation. The difference on the level of states may be very significant. Nevertheless, there are some common trends in state budgets that make all the state budgetary and taxation systems similar. Traditionally states tend to balance their budget through keeping taxes low and still pay for increasing costs. Obviously, in such a situation it is obvious that in order to keep state budgets balanced states need the government support for managing their costs and develop effective taxation and budgetary system in order to prevent possible negative effects of economic problems provoked by misbalanced budgets.

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On the level of the state, state budgets play a crucial role because they are used for the redistribution of the wealth in terms of the state. Basically, the state budgets are focused on the vitally important problems of each particular state. As a rule, the major areas where the funds of a state budget are directed are public areas, where the support of the state is essential. In this respect, it should be said that state budgets are mainly concentrated on the financing of the state public schools and education system at large. Another important area where the funds of a state budget are directed is the state healthcare system. Also, a state budget maintains the public facilities, infrastructure, communications, including roads, public buildings, etc.
In such a way, it is obvious that state budgets are focused on the major areas which are needed for the local population of each state. States budget are flexible and mobile since the funds may be used more effectively compared to the use of the Federal budget. What is meant here is the fact that each state defines its own budget itself, independently from any other external sources. In other words, the Federal government can hardly influence the formation of a state budget and the use of its funds, unless it violates the existing federal laws and legal norms (Piketty and Saez, 2007). Consequently, the state can define independently the most problematic areas which need the financial support and where the state budget funds may be directed. For instance, the state budget funds may support a reform in a state healthcare system to make it more available to people and more effective.
However, in such a situation the problem of the balance between taxes and expenses of state budgets rises. Obviously, a state budget needs a reliable source of revenues which could provide the state with the possibility to finance projects in terms of the state, but many states tend to avoid increasing taxes since it can potentially decrease the number of taxpayers who are more likely to flee from the state here taxes are exorbitant. At the same time, states attempt to maintain increasing funding of social sphere and increase their expenses on education, healthcare system and other socially important areas. The reasons for such an attention of states to healthcare issues, or education as well as other socially significant problems is quite logical since the financial support of healthcare system, education and other socially significant areas contributes to the stabilization of the social situation in the state and the growth of the genera level of life of the local population. Consequently, the standards of life in the state grows higher and states budget can count for a larger number of taxpayers that flee from unstable states in search of stable states where they will not face any threat to their property neither from the part of criminals nor from the part of the state that collects high property taxes, for instance.
On the other hand, such strife of states to decrease taxes and increase expenses can potentially misbalance the budget, because costs grow rapidly, while taxes remain low. As a result the gap between state budget revenues and expenses grows wider and states need the support of the federal government and federal budget to close the gap. In this respect, it should be said that the reliance of states on the federal government support is justified since a part of taxes collected in each states is used on the federal level. Naturally, the states can count for the assistance of the federal government which should help states improve social situation, including increasing financing of healthcare, education, etc., in terms of national programs which could be realized in all states with the help of the federal government.
At the same time, the federal government cannot fully protect states from economic crises, since the federal government support cannot always cover the gap on the level of states budget. As a result, states need to improve their tax systems in order to increase their effectiveness and, therefore, increase revenues of state budgets. However, the increase of taxes comes into clashes with the desire of states to keep taxes low. In such a situation, it is possible to recommend enlarging the basis of taxation. In other words, it is possible to keep taxes low but increase the number of taxes that will increase revenues of state budgets but, simultaneously, will not be too harmful for income of people.
Thus, taking into account all above mentioned, it is possible to conclude that state budgets in the US play very important role since, along with the Federal budget, they target at the funding of socially significant programs and projects and support of people who need the state support because of their low level of income, disability, and other factors. At the same time, state budgetary systems function effectively only due to the existing state taxation systems which are the major tool of collecting funds for state budgets.—————————————————————————–
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