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AbstractExperience in state revenue forecasting humbles and educates the public finance scholar and can inform the public administrator. It teaches the limits of econometrics, the importance of disaggregation, the significance of tax administrators, the utility of causal models, the issue of data problems, the need to understand tax structure, the importance of consensus forecasts, the terror of recessions, and the reality of being wrong. In the Indiana consensus system, experience provides greater respect for public servants seeking to make a sustainable fiscal system function and probably contributes to making the revenue forecast binding in the budget process.

Retail sales and value‐added taxes both aim to tax consumption, but lawmakers, the public, and academics view them differently. Several American states have sought increased retail sales tax (RST) reliance, some have argued for a national RST, but a value‐added tax (VAT) remains anathema. Conversely, international observers strongly reject the RST in favor of the VAT. This paper examines these views from the standpoints of administration, transparency, rate increases, and breadth to see how misconceptions might be involved.

Revenue estimates or scores identify the expected impact of a change in a tax law or a change in how existing tax laws are administered. The processes used by states to produce these estimates have been given considerably less attention than have those used to create the revenue baseline or forecast, although both are important to creation of fiscally sustainable budgets. A review of state processes shows that estimating responsibility most often is in a legislative agency, that states usually employ microdynamic estimating methods, generally make their work available on the Internet although infrequently showing the methodology used for an estimate, and rarely have formal quality control procedures for the estimates. Macrodynamic estimates are very rare and some states once requiring this approach no longer do so.

Do decentralization arguments extend to administration of subnational taxes? While centralized administration promises quality service at reasonable cost, it may dull accountability and slow the revenue flow. Also, central administration may devote less attention to collecting these taxes than for its own. Self‐administration brings administration closer to taxpayers and assures representation of jurisdictional interests in revenue apportionment disputes. However, subnational governments may lack technical capacity. That is the dilemma: while the central administration may be indifferent to rigorous collection of subnational taxes, subnational governments may lack capacity for self‐administration. In practice, nations use many different alternatives for administering subnational taxes.

The past quarter century has produced little change in the government revenue share of gross domestic product in the United States. The federal share has fallen, but the state and local share has increased. There has been no great change among revenue sources, certainly nothing like the flight from the property tax that characterized the prior decade. Several issues have dominated revenue policy discussions over the last quarter century. These include the role of the property tax, realignment of the federal tax base away from income, tax simplification, and base broadening. There have been no definite solutions to date.