Final answer:
State governments tax consumers through sales taxes on goods and services and charge various fees for state services. They also collect personal and corporate income taxes, and receive intergovernmental revenues from the federal government. The methods and levels of taxation can vary significantly between states.
Step-by-step explanation:
State governments tax consumers primarily through sales taxes, which are a percentage added to the purchase price of consumer goods and some services. While most states impose sales taxes, a few like Oregon and New Hampshire do not, relying instead on other forms of taxation such as property or income taxes. Vendors collect these sales taxes at the point of sale and must remit them to the state, often keeping a small portion to cover their administrative expenses.
Additionally, many states have taxes on personal income and corporate earnings. Fees for various governmental services, such as license plates or hunting licenses, represent another source of revenue. To supplement these funds, state and local governments also receive intergovernmental revenues from the federal government, which can constitute a significant portion of their budgets. These funds are for specific aims, like welfare, healthcare, and education.
The specific sources of tax revenue vary significantly from state to state. Some local governments depend heavily on property taxes, which are based on the value of the property owned. The overall trend has shown an increase in tax revenue as a share of GDP, correlating with rising government expenditures.